‘Regional grouping will boost mutual gains’

Font Size

Print

Feedback

Email

Discuss

: billion. This was due to rise in imports from Brunei, Malaysia, Indonesia and Singapore. The sudden rise in imports was due to increased imports of petroleum oil from Brunei—edible oil (palm), petroleum oil, coal briquettes, copper ores and concentrates from Indonesia; and petroleum oils and gases, automatic data processing machines and edible oil (palm) from Malaysia on MFN basis.

The rise in imports from Singapore, however, could be attributed to India’s bilateral FTA with Singapore, which was implemented in August 2005. With the delayed outcome of Doha negotiations, this agreement will provide ample opportunity to Indian industry and that of Asean to explore each others’ markets on preferential basis.

Due to its autonomous liberalisation of tariffs, India has almost reached the Asean level (in some sectors, the duties of some of the Asean members are higher than India’s tariffs) and therefore, the fear that trade deflection may take place from third countries appears remote. Secondly, since the duties on certain sectors are more or less at the same level the effects of trade creation can be more than trade diversion. This agreement will provide an opportunity to the industry.

The framework agreement prescribed for negotiations to be held in services, investments and other areas of cooperation and to conclude them by 2007, however, discussions could not be held on them in the TNC as most of the time was devoted on goods. India wanted to start the dialogue on these issues. Asean, however, was keen to conclude the agreement on goods first and then discuss services as India is likely to benefit from them.

Now that the deal on goods is finalised, it would be important that the TNC takes over the task of negotiating other agreements and concluding them in a time bound manner. India will be the likely beneficiary in services and getting investment inflows due to the comprehensive agreement.

Although there are several trade and investment linkages between India and the Asean, these links are relatively weak. This engagement would expand the scope and depth of the trade and investment relationships and would forge closer economic linkages between their industries. Given the increased regionalisation of world trade, the coming together of India and Asean to form a regional grouping will be mutually advantageous, both strategically and economically.