India, ASEAN talks on opening services trade begin tomorrow

New Delhi, Oct 11, 2009

Negotiators from India and ASEAN bloc are meeting in New Delhi tomorrow to broad base their free trade agreement to include services, an area of key interest for India as the sector accounts for over half of its GDP.

India signed the free trade agreement (FTA) with the 10-member Association of South East Asian Nations (ASEAN) on August 13 that committed to begin breaking duty barriers from January 2010 on goods.

With services contributing 55 per cent of its economy, India is quite keen on tapping the growing services market in south east Asia.

Officials from the Commerce Ministry, supported by their colleagues in the Finance Ministry, would deliberate for three days with members of the ASEAN Trade Negotiating Committee on some of the substantive issues on opening the services sector for people in India and south east Asia.

"The negotiations are likely to be completed in the next couple of months," a senior commerce ministry official said.He said two rounds of discussions have already taken place.

Once an agreement is signed, professionals and companies in a host of services like banking, financial services, information technology and tourism would be able to set up businesses in India and the ASEAN region without irritants like visa restrictions.

The issues relating to complex tax regime of different countries would also be discussed.

Earlier Ambassador of Thailand to India Krit Kraichitti had said that though services sector is important to multiply trade and investment between ASEAN countries and India, safeguard measures would have to be incorporated in the pact.

Duty-free import and export of 4,000 products, ranging from steel to apparel to sugar and tobacco would take place over a period of eight years. Eighty per cent of goods traded would be become duty free by 2016.

The signing of the FTA had triggered some protests in south India where political leaders, including Defence Minister A K Antony and several MPs from Kerala had raised concern over the impact on growers of the plantation crops.

However,duties on sensitive items like pepper, rubber, tea,coffee and palm oil would not be eliminated and retained at above 40 per cent.These concerns arose out of "disinformation" ,said Commerce and Industry Minister Anand Sharma.

However, a Group of Ministers, headed by Finance Minister Pranab Mukherjee, is looking into the issue and would address the concerns of farmers in south India.The bilateral trade between the two regions was USD 40 billion in 2007-08.

The 10 members of ASEAN are - Malaysia, Indonesia, Myanmar, Brunei, Laos, Cambodia, Thailand, Vietnam, Philippines and Singapore.