India, ASEAN likely to sign FTA on services next week
India is quietly firming up its relations with ASEAN, which could see formal signing of the India-ASEAN free trade agreement on services and investments, during their annual summit later this month in Brunei Darussalam. With the services sector contributing majorly to the country's growth, India is keen to have the FTA in services and investment signed so that it can enter the large ASEAN market.
India and the 10-nation ASEAN had finalised the FTA in services and investments during the ASEAN-India Commemorative Summit last December. A similar pact on goods was implemented in 2011.
"The text of the FTA in services and investments is ready. It only needs to be signed now," an informed source told IANS, terming it as a "big ticket agreement".
Both sides ironed out irritants that remained in the FTA on services during the ASEAN Economic Ministers (AEM) meeting in Brunei in August. The pact, when implemented, is expected to facilitate the temporary movement of business people, including contractual service suppliers and independent professionals in accounting, architecture, engineering services, medical and dental, nursing and pharmacy, computer services and management consulting.
Some countries, especially the Philippines and Indonesia, had voiced concern over the movement of professionals under mode 4 - which will make entry of Indian professionals to the ASEAN nations easier. They feared it might affect their workforce with the increased presence of Indian workers and were opposing the agreement.
"Their concerns have been sorted out. The FTA is being readied for signing, most possibly during the summit," another source told IANS.
The ASEAN-India Summit is being held in Brunei on Oct 10 with Prime Minister Manmohan Singh, a strong proponent of India's Look East Policy, attending.
India and the 10-member bloc comprising Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam elevated their relationship to the level of a strategic partnership last December during the commemorative summit that marked two decades of dialogue relations.
Total trade between India and ASEAN increased by 37 percent in 2011-12 to reach nearly USD 80 billion, surpassing the target of USD 70 billion. With the pact on services and investment, two-way trade is expected to touch the USD 100 billion mark by 2015. ASEAN is India's fourth-largest trading partner after the EU, the US and China.
India is also part of the Regional Comprehensive Economic Partnership (RCEP) dialogue with ASEAN that aims to create a giant free trade area encompassing the major Asian economies by 2015. The first round talks were held in Brunei in July between ASEAN and its six partners - Australia, China, India, Japan, South Korea and New Zealand - while the second round of talks was recently concluded in Australia.
The RCEP proposed trade area would be the largest in terms of population at three billion and with a combined GDP of around USD 19 trillion. When fully established, it would become the largest trade bloc in the world.
The RCEP would also help streamline trade rules, cutting across the region and facilitate smoother trade ties and reduce trade costs. It would also bring Japan, China and India - three of Asia's largest economies - within one agreement.
Together, India and ASEAN constitute a community of 1.8 billion people, representing one-fourth of humanity, with a combined GDP of USD 3.8 trillion.
To take cooperation to higher levels, India set up the ASEAN-India Centre in June in New Delhi. Both sides are in talks to set up the ASEAN-India Trade and Investment Centre.
India is also supportive of the objective of an ASEAN Community by 2015 and the initiative for ASEAN integration.
Both sides are also working on boosting connectivity projects, including the Trilateral Highway, linking Thailand and Myanmar with India, to boost trade and people-to-people connect.
(Ranjana Narayan can be contacted at [email protected])
(Posted on 02-10-2013)