India, Asean FTA likely to be operational by Jan

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New Delhi: India would soon initiate the process to make the Asean Free Trade Agreement operational from January 1, 2010. The duty-free deal was signed in August 2009, in the midst of opposition from plantation sector farmers and political functionaries from southern states.

“By the month-end we will know which Asean member nations are ratifying the agreement in 2009. We expect ratification from Brunei, Malaysia, Thailand, Singapore and Myanmar by the year-end. Other nations should give the green signal in the first couple of months of 2010,” said department of commerce joint secretary PK Dash at the sidelines of a seminar organised by Research and Information System for Developing Countries and the India Trade Promotion Organisation (ITPO).

Once the Indian government has confirmation from nations that will ratify the FTA by the year-end, the department of commerce would initiate the process to issue the relevant notifications, specifying the items on which the duty cuts will be seen from January, 2010. After this, the finance ministry would issue the notifications that are expected in the last week of December, 2009.

The FTA would lead to complete slashing of import duties in 80% of the nearly 5,000 items that India broadly trades with Asean. However, this will be done in phases, to be completed by 2016.

Dash maintained that plantation sector problems are structural and have nothing to do with India’s tariff regime. He pointed that even in sectors like palm oil, duty cuts in which have lead to widespread protests in some southern states, Indian entrepreneurs are exploring business opportunities in Asean. “A Morena-based company KS Oil has acquired 85,000 acres in Indonesia to develop palm oil plantations. The company wants to export palm oil to India,” Dash said.

The agreement would be upgraded to a comprehensive economic partnership agreement by August, 2010, when both the sides are expected to complete talks on liberalising services sector trade and investment norms.

Trade experts feel that while FTA could lead to promising business opportunities for Indian exporters, the deal could have been better negotiated, as India Inc is still to grasp the benefits of the deal. “In the face of it, FTA is a win-win situation. Yet, there is noticeable lack of enthusiasm in the domestic stakeholders,” said N Chandra Mohan, professor, IILM Institute for Higher Education.