India and Malaysia will begin negotiations for a bilateral Comprehensive Economic Cooperation Agreement from January next year to enhance trade in goods, services and investments.
Both countries had set up a joint study that recommended the establishment of the CECA.
The India-Malaysia joint study group concluded that there is a huge potential for trade in goods, services and investment by developing the existing bilateral economic relationship into a comprehensive bond, Commerce and Industry Minister Kamal Nath said in Delhi on Monday at a CII seminar.
The joint study had also indicated that bilateral trade could reach 16 billion dollars by 2012 from 6.6 billion dollars in 2006-07.
The Malaysian Trade Minister Rafidah Aziz is in Delhi on a weeklong visit.
Aziz, who will be holding discussions with Indian officials on CECA, will also have a series of meetings with Indian industry in Chennai, Delhi and Mumbai during her stay in the country.
She said in Kuala Lumpur on Saturday that the FTA is proposed to be a comprehensive one, encompassing trade in goods, services, investment and economic cooperation.
Aziz was quoted as saying in media reports that the two countries can cooperate in various sectors such as software development, biotechnology, education, tourism, transport, health care and pharmaceuticals.
Significantly, Malaysia has been demanding a liberal market for palm oil from India under the FTA with ASEAN, which has remained stuck for lack of convergence.
New Delhi has made an offer to reduce customs duty on crude palm oil to 50 per cent and on refined palm oil 60 per cent by 2018. ASEAN, particularly Malaysia and Indonesia, wants India to bind the import duties at 30 per cent and 40 per cent on crude and refined palm oil respectively.