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Rediff News  All News  » Business » India-Asean trade pact to wait

India-Asean trade pact to wait

April 07, 2009 09:49 IST

India will not be signing the ambitious Free Trade Agreement with the 10-nation economic bloc, Association of Southeast Asian Nations, at the 4th East Asia summit to be held in Thailand on April 11 and 12. Commerce Minister Kamal Nath will be attending the summit, where the seventh India-Asean meeting is also scheduled at the same venue.

Government sources confirmed that the FTA will not be signed during the summit. "Some issues on the FTA would come up for discussion," said an official in the know.

In February, Nath had said that both the sides were likely to sign the agreement at the East Asia Summit.

Thus, the new government, which comes to power in mid-2009, will take a call on signing the FTA. While the India-Asean summit will focus on relations between both the sides, the East Asia summit will also be attended by China, Japan and Korea.

"The FTA is just one part of the Asean-India relations. There are other aspects of cooperation, which will come up for discussion," said trade expert Nagesh Kumar, director-general of Research and Information System for Developing Countries.

The negotiations on the FTA were concluded in mid- 2008, and the agreement was supposed to be signed in December 2008. However, due to unfavorable political conditions in Thailand, the East Asia Summit and the Asean-India summit had to be postponed. Meanwhile, elections were announced in India.

But what made things more complicated was Asean's insistence on cutting import duties twice within a period of 12 months. India did not agree to this. The issue will come up for discussion at the India-Asean summit.

Significantly, the summit is taking place at a time when most developed economies are expected to shrink this year. "The importance of these two summits lies in the fact that Asean, China and India will still be growing. Hence, it is important to deepen economic ties," Kumar added.

Issues which would come up for discussion in the East Asia summit include the Open Skies Policy, science and technology fund, tourism, energy, environment and disaster mitigation.

Nearly 10 per cent of India's exports head for the Asean nations. Both the sides have already initiated talks to include services and investment in the FTA talks.

BS Reporter in New Delhi