India and the Association of Southeast Asian Nations (ASEAN) on Thursday finalised the much-awaited free trade agreement (FTA) in services and investments. This move is likely to boost trade to $100 billion by 2015.
“It gives me great pleasure to see that our commemorative summit on Thursday coincides with the conclusion of negotiations for the FTA in services and investments. 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,’’ Prime Minister Manmohan Singh said here while addressing the summit on the inaugural day.
After operationalising FTA in goods last year, both sides were engaged in widening the base of the pact by including services and investments.
At present, trade between India and ASEAN stands at $80 billion. Dr. Singh said that following the implementation of FTA in goods, trade grew by 41 per cent in 2011-12. “Two-way flows in investments have also grown rapidly to reach $43 billion over the past decade. As ASEAN investments into India have multiplied, ASEAN countries too have emerged as major destinations for Indian companies. 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,’’ he remarked.
Commerce and Industry Minister Anand Sharma said it was a matter of great satisfaction that India and ASEAN had been able to conclude the services and investments agreement.
“We have been able to reach an agreement well ahead of the commemorative summit as had been directed by our leaders during the ASEAN summit in Cambodia recently. This will pave the way for larger economic integration in the region and give a fillip to regional economic partnership in the South Asia Region,” he added.
Besides FTA with ASEAN, India is negotiating similar market opening pacts with members of the grouping. India has already implemented FTA with Singapore and Malaysia and is negotiating with Indonesia and Thailand in this regard. The FTA would also pave the way for discussions on a regional comprehensive economic partnership (RCEP) that ASEAN plans to seal with its six key trade partners, which include India.
India had been demanding that ASEAN open up its service sector further, including steps to cover independent professional services and contractual service suppliers at all levels. It is learnt that after a tough round of negotiations on Wednesday, India agreed to drop its request for independent professional services and as a trade-off, ASEAN dropped its request for prudential measures in financial services. The final legal documents on services and investment pact is likely to be given a further shape by February, 2013, and the signing could take place in August next year during a consultation between ASEAN economic ministers and Mr. Sharma in Brunei Darussalam.
ASEAN and six partners — Australia, China, India, Japan, South Korea and New Zealand — will start first-round talks on the RCEP next year, which are expected to form the world’s economic bloc in 2015.