India keen to enter Asean services sector

The Star, Malaysia

India keen to enter Asean services sector

By Laalitha Hunt

12 September 2009

KUALA LUMPUR: India looks forward to accessing the vast services market of Asean and is currently negotiating an agreement on trade in services and investments with the group.

According to the High Commission of India, the recent signing of the Asean-India free trade agreement (FTA) would give further impetus to the trade and investment linkages between them.

India and Asean’s total trade in services in 2006 was US$137.5bil and US$280.9bil respectively.

The negotiations on the new agreement are expected to be concluded by December.

In a statement, the High Commission said India and Asean aimed to achieve bilateral trade of US$50bil by 2010 with the recent signing of the FTA that would come into force on Jan 1.

Asean is a major trading partner for India and accounts for about 10% of its global trade.

From April 2007 to March 2008, bilateral trade between India and Asean was about US$40bil.

The trade in goods agreement focuses on tariff liberalisation on mutually agreed tariff lines from both sides. It is targeted to eliminate tariffs on 80% of the tariff lines accounting for 75% of the trade in a gradual manner starting next year.

Under the agreement, Malaysia will eliminate import duties on 6,792 tariff lines or products in the normal track (1) beginning Jan 1, 2010, and ending on Dec 31, 2013, as well as 1,266 tariff lines in the normal track (2) beginning Jan 1, 2010 and ending Dec 31, 2016.

The import duties on 1,336 tariff lines placed in the sensitive track by Malaysia will be reduced to 5% by Dec 31, 2016.

India, which is Malaysia’s 12th largest trading partner, will eliminate duties on 7,767 tariff lines or products in the normal track (1) by Dec 31, 2013 and 1,260 tariff lines in the normal track (2) by Dec 31, 2016.

The import duties on 1,810 tariff lines placed in the sensitive track by India will be reduced to 5% by Dec 31, 2016.

India, on its part, has excluded 489 items from the list of tariff concessions and 590 items from the list of tariff elimination to address sensitivities in agriculture, textiles, auto, chemicals, crude and refined palm oil, coffee, tea and pepper, among others.

Asean countries had also maintained a similar exclusion list from the proposed tariff concessions or eliminations, the statement added.

The agreement also provides for bilateral safeguard mechanisms to address sudden surge in imports after the agreement comes into force.

In such an eventuality, if it hurts a domestic industry, safeguard measures, including imposition of safeguard duties, may be put in place for up to four years.

The flexibility to invoke the safeguard measures would remain available for both sides for seven to 15 years from the date the agreement came into force, the statement added.

According to a spokesman with the International Trade and Industry Ministry, the FTA was the second bilateral trade agreement signed by Asean this year, after the one with Australia and New Zealand.

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