India, Asean inch closer to free trade pact in services, investments
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Prime Minister Manmohan Singh today said that India and the Association of Southeast Asian Nations (ASEAN) have concluded negotiations for a free trade agreement (FTA) in services and investments. The background work clears the way for greater economic and political integration between India and the bloc of 10 countries that accounts for a GDP of about $2 trillion in 2011. Singh, in his address at the plenary session of India-Asean commemorative summit, exuded confidence that mutual trade will exceed $100 billion by 2015, and said the aim should be $200 billion in the next ten year.
A government official said with India already having FTAs with Japan and South Korea and negotiating a similar arrangement with New Zealand and Australia, the conclusion of the services and investment chapter with the Asean will lead to emergence of Asia as a "club" for manufacturing, services and investment. With the conclusion of negotiations now, the attention shifts to the final agreement which would have to be ratified by all the nations. The official said the time table could allow for the revised FTA to be implemented by early 2014.
Trade experts said the move is also a balancing act to counter the rising power of China in Asia, especially in the light of recent troubles in the South China Sea. Biswajit Dhar, director of Research and Information System said that while the move complements the goods agreement, India businesses will have to get "locked into the production network" if they want to establish their presence in the Asean. Further, he said that conclusion of investment chapter will prevent Maldives-GMR kind situation with these nations. Investment chapter essentially protects the investment both pre and post establishment and ensures consistency for the corporates.
The move is going to throw open the doors of the 10 countries — Brunei, Indonesia, Cambodia, Laos, Vietnam, Singapore, Malaysia, Myanmar, the Philippines and Thailand — for the movement of skilled workers from India among other things. The services sector is the core strength of India with around 60 per cent of GDP coming from here.