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|14 August 2009
India, Asean signs trade pact
India on Thursday signed a landmark free trade agreement(FTA) with 10-member regional grouping Asean that will eliminate tariffs on around 4,000 products such as consumer electronics, pharmaceuticals, machinery, metals and readymade garments, Indian daily the Economic Times reported.
The paper calls the pact a strategic victory for India, which has been trying to intensify its relationship with the region as a counterweight to the regional blocs in North America and Europe. Formal negotiations on liberalising services and investment, however, are yet to begin and the challenge before India is to expedite the process.
“The agreement with Asean is well-balanced and is in harmony with India’s ‘Look East’ policy,” commerce and industry minister Anand Sharma said after the signing ceremony in Bangkok on Thursday. The two sides expect trade between them to increase from the current $40 billion to $50 billion in 2010.
The agreement, which will be implemented from January 1, 2010, will result in elimination of duties on about 3,200 products by December 2013, while duties on the remaining 800 products will be brought down to zero or near zero levels by December 2016.
The agreement keeps 489 items out of the scope of tariff cuts. These include 300 farm products, automobiles and certain categories of auto parts, machinery , chemicals and textile products.
Duties on “sensitive” farm products—palm oil, tea, coffee and pepper—will be brought down to 45-50 percent over 10 years. India and Asean had tough negotiations on these products, with Asean countries pushing for sharper cuts in tariffs. Sharma got the go-ahead for signing the agreement only after Prime Minister Manmohan Singh allayed apprehensions of parliamentarians from Kerala that the plantation sector will not be adversely affected by the pact.
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