After 6 yrs of talks, India seals free trade pact with Asean, effective New Year

New Delhi, August 28: Less than a month after the collapse of the WTO negotiations at the mini-ministerial meeting in Geneva, trade representatives from India and ASEAN, meeting in Singapore, today announced that they had concluded a free trade agreement (FTA), negotiations for which started in 2002.

The FTA will come into force from January 1, 2009 — planned tariff reductions by both trading partners will begin in a phased manner four months from now. The final text of the agreement will be signed by trade representatives from India and all of ASEAN’s 10 member nations in December.

ASEAN and India will eliminate import duties on 71% of products in their trade basket by December 31, 2012 and another 9% by 2015. The deal will also include duties on products placed in the sensitive list covering about 8-10% to be reduced to 5% by 2015. Every country will have certain items exempted from any tariff reduction commitments as per domestic sensitivities.

The current agreement does not yet consider trade in services and investment. Talks on these will begin soon.

The FTA is aimed at facilitating an open market environment between the two trading partners with a combined population of over 1.7 billion people and GDP of almost $2.4 trillion. Growing at 25 per cent, India-ASEAN trade reached $38 billion last year and a target of $50 billion has been set for 2010.

India had started off with about 1,400 items on its negative list — the list of items free from tariff cuts. It later pruned it down to about 300 items.

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