A latest survey done by Federation of Indian Chambers of Commerce and Industry (FICCI) on factors impacting trade and investments between India and ASEAN and the effect of India-ASEAN free trade agreement (FTA) on Indian industry has revealed that the FTA in goods has had no adverse impact on their exports.
The survey titled `Business Beyond Barriers’ to ascertain factors impacting trade attributes this partly to the fact that this FTA is restricted to goods where India’s manufacturing sector is not able to capitalise and also due to lower duties offered by ASEAN to China, through the China-ASEAN FTA.
As for imports into India, the survey indicates that 35 per cent of the respondents acknowledge that current FTA in goods has a positive impact on their imports into India due to duty reductions by India, which helps to reduce input costs. The remaining 65 per cent felt that liberalised import regime has not had any impact on their business.
Going forward, most companies do not foresee any adverse impact of lower import duties for products from ASEAN. The reduction in input costs is seen as an opportunity for making Indian products more competitive and hence expanding consumer demand. It states that the full benefits of the ASEAN-India FTA on goods, which came into effect in August 2011, are yet to be seen.
This is evident from trade between India and ASEAN which has stagnated under $80 billion, for the last two years, though we are targeting $100 billion by 2015. The present survey brings out expectations of members of corporate India and drew responses from Indian companies having business engagement with ASEAN. The survey was targeted at companies from different sectors which have already invested or are doing business with ASEAN Countries.
Respondents to this online survey covered sectors such as pharmaceuticals, automotive, manufacturing, plastics, chemicals, consulting services, infrastructure & construction, healthcare, agriculture products, mining & minerals and services.
In response to question on impact of an FTA between Regional Comprehensive Economic Partnership countries (RCEP - a grouping of 16 countries comprising 10 ASEAN countries + Australia, China, Japan, Korea, New Zealand and India), almost half of the respondents either did not have any view or felt that there would be no impact of such an agreement. A sizable 30 per cent of the respondents were not able to comment on this new economic block, as it is still evolving.
However, respondents do expect increase in India’s GDP due to enhanced trade and investments within RCEP framework. They suggested that there should be full clarity on taxation and other regulatory compliances. A Single Window Clearance, for access to all 16 countries within RCEP is also suggested for being part of the Agreement.