India on Thursday said its free trade agreement (FTA) in goods with the 10-nation Association of South East Asian Nations (Asean) would be expanded soon to include services and investments, a move that would reinforce New Delhis Look East Policy in the realm of trade and economic engagement and ease movement of Indian doctors, engineers, accountants and professionals in various other trades to the Asean countries. Although the two sides did not sign an agreement to enlarge the scope of the three-year-old FTA in goods at the India-Asean Commemorative Summit here, India said the contours of the agreement have been finalised.
The agreement would be signed at an appropriate date.
Speaking at the plenary session, Prime Minister Manmohan Singh said trade between the two would exceed $100 billion by 2015 (now $80 billion), adding, we should aim for the milestone of $200 billion ten years from now.
External affairs minister Salman Khurshid said: We are satisfied and there are no rough edges in the services and investment FTA. Commerce minister Anand Sharma said: Its a matter of great satisfaction that negotiations on India-Asean Trade in Services and Investment were brought to a successful conclusion. Negotiators from all countries brought different perspectives to the table. However, political mandate from the highest levels ensured that all outstanding issues were resolved appropriately. This will pave way for the larger Regional Comprehensive Economic Partnership taking shape in the East Asian Region. It may be noted that the Asean side hasnt seemed particularly keen to sign the agreements on services and investments after the goods pact became operational. This was despite the fact that the original plan was to have to bolster the goods pact with liberalisation of services and investment also.
The two sides also adopted the Asean-India Vision Statement 2020, which will also commit both sides to great security cooperation besides asking for greater private sector opportunities to enhance trade.
Experts say the free trade pact is expected to facilitate temporary movement of business people, including contractual service suppliers and independent professionals in accounting, architecture, engineering services, medical and dental, nursing and pharmacy, computer services and management consulting.
The impact will be seen after knowing what all has been liberalised in the services sector. After the trade in goods, one can say that almost all areas have been covered for liberalisation. The investment part will look at industrial rights while the services portion would look at the range of complimentary inputs necessary for the production process and better integration of production networks, noted Biswajit Dhar, director general, Research and Information System for Developing Countries.
While New Delhi had been insisting that the Asean offer was below expectations due to limited commitments offered on movement of natural persons, Asean was insistent on removal of the category of intellectual property (IP) from the definition of categories of natural persons. Besides, there were other outstanding issues like definition of investment, exclusion of IPR, portfolio investments, claims to money, permanent resident and indirect expropriation. India had also asked for opening up of the Mode 4 category or movement of natural persons- which has been opposed by Indonesia and Philippines because of unemployment issues in these countries.
Besides, India had also insisted on having at least a limited Annex with common definitions for the various categories of natural persons on which future commitments can be made.
Two-way flows in investments have also grown rapidly to reach $ 43 billion over the past decade. India-Asean trade has grown over 10 times in the 10 years since we launched the annual summits. Following the implementation of our FTA in goods, trade grew by 41% in Indian fiscal year of 2011-12, Singh added.
The Prime Minister added that 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.
Besides FTA with Asean, India is also negotiating similar market opening pacts with members of the grouping bilaterally.
India has already implemented FTA with Singapore and Malaysia and is negotiating with Indonesia and Thailand in this regard.