India-ASEAN nations to sign FTA

India and six ASEAN nations have completed a trade deal that will see duties on most products reduced or eliminated in a phased manner over the next seven years.

The deal, announced Thursday, is slated to go into effect in 2009. Indian Prime Minister Manmohan Singh is expected to sign the pact in December at an East Asia summit in Bangkok. 

The FTA would eliminate duties on 71 percent of the goods traded between India and Thailand, Indonesia, Malaysia, Burma, the Philippines and Vietnam by the end of 2012. By 2015, another 9 percent of goods would be included on the list. Meanwhile, duties on key ASEAN exports like palm oil, coffee, pepper and tea would be reduced to 5 percent by 2015, but not every country would enjoy the rollback in duties on all products. Indian media reported Friday that countries the duty reductions will be applied to individual ASEAN nations according to domestic sensitivities.

For instance, India is a huge importer of palm oil from Southeast Asia, though its duties on the product are high (around 50 percent, depending on the country). Nations within the ASEAN bloc that already have a large proportion of exports headed to India won't get the same duty reductions as countries with fewer imports.

India-ASEAN trade has been growing fast in recent years, at a 25 percent clip, with $38 billion in trade flowing in 2007, and an expected $50 billion by 2010. India already has more limited free trade agreements in place with Thailand and Singapore. 

Source: American Shipper