India-Asean trade likely to cross $50 bn by ’10

New Delhi: With the India-Asean (Association of South-East Asian Nations) free trade agreement (FTA) likely to be inked in August at the Asean economic ministers meeting in Thailand, India-Asean trade is likely to surpass $50 billion by 2010.

The FTA will enable member countries to reduce tariffs for more than 4,700 categories from January 2010 onwards, senior government officials told FE. Diplomats from some members of Asean like Vietnam, Malaysia and Indonesia opined that India should reduce the duties on the four products—palm oil, tea, coffee and pepper. The duty ranged between 50% and 60%.

India has agreed to cut import duties on crude palm oil by 37.5% and on refined palm oil by 45% by 2018.

Both India and Asean have attained growth in exports at rates higher than the global average over the last two-decades. The trade between the two sides accounted for an average of 9% of India’s total trade in the last three years. However, Indo-Asean trade, which has been growing at a compounded annual growth rate (CAGR) of 27% since 2000, stood at $38.37 billion in 2007-08.

Singapore and Malaysia have been India’s most prominent trading partners as far as bilateral trade between India and individual Asean countries for the entire period is concerned.

From 1997 to 2008, the two-way trade between India and Asean countries witnessed an approximate seven-fold increase from the level of $5.9 billion to more than $38.37 billion in 2007-2008.

“With a trade volume of $5.83 billion in 1996, the ‘East Asian Crisis’ gave a hammering blow to this impressive growth resulting in a very little growth in absolute terms for the following two years. The trade picked momentum post 1999-2000, both in absolute and percentage terms and is moving in the positive direction since then,” explained officials.

Growth in India’s exports to Asean in recent years has been impressive as compared to other important destinations. As far as its imports from Asean countries are considered, the same is not true. Though it showed some improvement in the last year.

Talking to FE, Ficci officials explained to FE, “Asean’s position in India’s total trade relative to EU and North America has improved between 1997-98 and 2006-07. While the share of EU and North America in India’s exports has been constantly declining, the share of Asean has been on the rise. Similarly, shares of both EU and North America in India’s imports have been...