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India-ASEAN FTA to boost opportunities for India Inc: FICCI - Deloitte study

18 May 2011 Evaluate

The India - ASEAN free trade agreement (FTA), which is currently restricted to trading in goods only, is expected to widen its scope as negotiations for a similar agreement for services are currently under way. According to Federation of Indian Chambers of Commerce and Industry (FICCI) - Deloitte White Paper, the FTA is likely to open up a range of business avenues and projects for the Indian companies and strengthen the trade dependence between India and ASEAN.

The White Paper underscored that opportunity in construction sector are enormous for Indian companies and they can seriously pursue opportunities in the construction related activities such as construction of bridges, canals, roads, school buildings, sports facilities and water-treatment plants.

The paper also highlights that Asean countries would also provide considerable business avenues in machinery, equipment, appliances apparatus and associated products, office equipment, computers and supplies, instruments and appliances, industrial process control equipment, optical instruments, and horological instruments industry/services categories. India also stands to gain in sectors such as medical supplies, telecommunication, radio, television and communication equipment, textiles, handicrafts and chemicals from its trade with the Asean economies.

Moreover, optimum gains of the FTA, which was signed on August 13, 2009, and came into effect from January 1, 2011, can only be realized when the trade agreement gets ratified by all the ten members of the Asean. So far, only eight nations viz., Singapore, Indonesia, Malaysia, Vietnam, Brunei Darussalam, Laos, Thailand and Myanmar have ratified the agreement. Though Cambodia and Philippines are yet to ratify the deal, both have indicated that they would implement their deal in the next of couple of months.

The India ASEAN FTA which was signed in Bangkok with Malaysia, Thailand and Singapore, is expected to be in place with all member countries by 2016. The FTA collectively covers a market of nearly 1.8 billion people and proposes to gradually slash tariffs for over 4,000 product lines. The trade between the two stood at about $44 billion in 2009-10.

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