India, Asean sign free trade agreement

India and Association of South east Asian nations (Asean) on Thursday signed an ambitious Free Trade Agreement. Both sides have set an bilateral trade target of $ 50 billion by 2010.

"The current Agreement which comes into force from 1 January 2010 would help achieve this trade target," said a Commerce Ministry statement. The deal was signed on India's behalf by commerce minister Anand Sharma. He also had bilateral discussions with Indonesian trade minister Mari Pangetsu. Sharma invited Pangetsu to attend a meeting in Delhi to discuss the status of the Doha Round of world trade talks.

India had cleared the deal in last week of July, amidst concerns expressed by political functionaries from Kerala, which included defence minister AK Antony.

Commerce ministry assured that there are built in safeguard mechanisms in the agreement to prevent any surge in imports, that could adversely impact the domestic industry.

"In such an eventuality if it hurts a domestic industry, safeguard measures including imposition of safeguard duties may be put in place for a period up to four years. The flexibility to invoke the safeguard measures will remain available for both the sides for a period of 7 years to 15 years from the date, the Agreement comes into force," the statement added.

The agreement will lead to tariff elimination in 80% of the over 5,000 goods that India trades with the rest of the globe. At the same time, there would not be any duty cuts in 489 items while in 590 goods, there would be partial duty cuts.

"Indian exporters of Machinery and machine parts, steel and steel products, agriculture products such as oilcake, wheat and buffalo meat, auto components, chemicals and synthetic textiles would gain additional market access as a result of tariff liberalisation by ASEAN. Indian manufacturers would also be able to source products at competitive prices from the ASEAN countries," the release added.

The FTA will now have to be ratified by certain Asean countries, including Indonesia and Malaysia.

Indian industry has welcomed the FTA. "Gains from India - ASEAN FTA in goods are only a small part of the total gains. Indian businesses are looking forward to a successful conclusion of the services and investment agreement in which negotiations are at an initial stage. Ambitious offers by ASEAN are necessary to ensure a balanced outcome", said Chandrajit Banerjee, Director General, Confederation of Indian Industry.