After six years of painstaking negotiations, India at
last signed the Free Trade Agreement (FTA)—of
course, relating only to goods—with the Association of South
East Asian Nations (ASEAN) on August 13. It shall, however,
come into force from January 1, 2010.
The current status of WTO talks being what it is,
FTAs—agreements that provide for free trade among members but
increase protection against non-members—are considered to
offer an instant solution to trade openness. The present
agreement with a trade block of 10 countries—Indonesia,
Malaysia, Philippines, Singapore, Thailand, Brunei Darussalam,
Vietnam, Lao PDR, Myanmar and Cambodia—that has a
combined GDP of over $2 tn offers India access to a big
regional market that imports goods worth $1 tn. In the year
2007-08, India-ASEAN trade, the bulk of which confines to textiles,
steel, processed food, plantation crops, and chemicals, is to the tune
of $40 bn. This regional block is India's fourth largest trading
partner. The agreement can become truly historical if only India succeeds in garnering at
least 8 to 10% share in the imports of ASEAN block countries by taking advantage of the
initial 5% duty followed by 0% duty.
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