Asean services pact talks concluded
Business Standard, India
Asean services pact talks concluded
Formal signing expected in Aug IT, BPO, healthcare among sectors to gain relationship now declared a strategic partnership
BS Reporter / New Delhi
21 December 2012
India and the Asssociation of Southeast Asian Nations (Asean), the 10-member regional grouping, moved closer on Thursday to completing a bilateral trade pact, by finalising a free trade agreement (FTA) on services and investments. They are expected to sign the pact in August 2013.
An FTA on goods was signed between Indian and Asean in 2011. India’s services sector contributes around 55 per cent to the country’s GDP, making this new pact significant. The agreement on services and investment had been pending.
The 10 members in Asean are Cambodia, Laos, Malaysia, Singapore, Thailand, Vietnam, Brunei, Indonesia, Myanmar and Philippines.
The pact will enable free movement of professionals from here such as doctors, engineers, architects and management consultants across the Asean markets. It is being seen as lifting the India-Asean relation to a new strategic partnership. Business process outsourcing (BPO) is among the areas likely to benefit once the pact is signed. In his opening remarks at the two-day ‘Asean India Commemorative Summit’ here, Prime Minister Manmohan Singh said negotiations for the new FTA had been concluded. “This represents a valuable milestone in our relationship. I am confident it will boost our economic ties in much the same way the FTA in goods has done,” he said.
India-Asean trade has grown over 10 times in the 10 years since the annual summits between the two sides began, the PM noted. While the summit is celebrating 10 years, India has been a dialogue partner with this regional grouping for 20 years.
Two-way trade grew 41 per cent in 2011-12, to touch $79 billion. While the target has been set at $100 billion by 2015, the PM said on Thursday it had the potential to reach $200 billion by 2022.
As Asean investments into India have multiplied, their countries, too, have emerged as major destinations for Indian companies, the PM said. “From energy resources to farm products, from materials to machinery, and from electronics to information technology, Indian and Asean companies are forging new partnerships of trade and investment.”
Implications
Services will include sectors such as healthcare, pharmaceutical, biotechnology, tourism, transport, communication and construction. The FTA aims to cover a market of 1.8 billion people and a collective GDP of $3.8 trillion.
Shubhada Rao, chief economist at YES Bank, told Business Standard it was extremely important for India to diversify its export destinations. “With the developed world likely to take a while before getting back to a normal trajectory, this agreement will allow India to look at growth in the Southeast Asian regions for greater competitiveness,” she said. According to her, India has already demonstrated its skill sets to the West. “We can now replicate our expertise before the Asean region in a cost-effective manner,” she added.
Agreed another economist, Sridhar Venkateswaran, who noted the services pact would be critical from India’s standpoint. “Visa on arrival and free movement of professionals in the services sector are among the advantages for India. Indian information technology and BPO companies will get significantly benefited, as they will be able to set up back-office centres across the Asean region,” he said. Also, the Asean market would like to access India’s tourism sector, he said.
Last month, the Indian PM was in Phnom Penh, Cambodia, to attend the Asean Summit and the parallel East Asia Summit, where talks were held on extending the scope of the FTA to services and investment. Ahead of the two-day Asean-India Commemorative Summit being attended by the heads of states, trade ministers had met to reduce the differences on many issues that some had in connection with the services and investment pact. Philippines and Indonesia, strong in outsourcing, are among the member-countries with some reservations on opening their services sector.
Speaking to reporters, Singapore Prime Minister Lee Hsien Loong said the Asean-India FTA was now a comprehensive agreement, in line with the other Asean Plus One FTAs. Lee is learnt to have met some industrialists in Gurgaon, the satellite city next to Delhi. Bharti Group chairman Sunil Mittal was one of them. Singapore’s Sing Tel is an investor in Bharti. The two discussed the scope of investments in Singapore.
A vision statement issued at the summit said, “We declare that the Asean-India Partnership stands elevated to a strategic partnership.” India and Asean share the vision of a peaceful, prosperous and resurgent Asia, which contributes to and promotes global peace and security, it added.
