India-Asean trade pact to be inked in August.

Kuala Lumpur: A long-awaited trade pact between India and the Association of Southeast Asian Nations (Asean) will be signed in August, Malaysia’s trade minister Mustapa Mohamed said, presaging a freer flow of investment and services.

India and the 10-member Asean announced the conclusion of talks on the free trade pact on investments and services in December when members of the grouping met in New Delhi for the India-Asean commemorative summit. The Asean members are Brunei, Cambodia, Indonesia, Malaysia, Myanmar, Laos, the Philippines, Singapore, Thailand and Vietnam.

“It will be signed in August,” Mustapa told a group of Indian journalists last week in Kuala Lumpur, Malaysia’s capital. “We are country coordinator for the negotiations for Asean. The movement of people has been the biggest problem, but we have been able to narrow the gap and the target is now to sign this (pact) in August. August is when our Asean economic ministers’ meeting takes place in Brunei. We managed to keep the compromise agreed to in Delhi in December.”

India hoped to sign the deal at the December summit in New Delhi, but both sides announced the conclusion of talks with the governments of the 10-member Asean going back to their parliaments for ratification of the deal.

The summit was held to mark 20 years of India’s ties with Asean that began with India becoming a dialogue partner of the dynamic grouping in 1992.

That coincided with the start of India’s ‘look East’ policy of building close ties with the economically vibrant region as the country began a series of economic reforms.

With the economies of Western countries still wobbly after the global downturn of 2008-09, India has been keen to strengthen its links with Southeast Asia.

Together, India and the Asean constitute a community of 1.8 billion people with a combined gross domestic product of $3.8 trillion. India and Asean already have a free trade agreement in goods since 2009 that saw a surge in commerce between Asia’s third-largest economy and Southeast Asian countries. Trade between the bloc and India reached $80 billion in 2011-12.

During the December summit, India and Asean set a trade target of $100 billion by 2015 and $200 billion by 2022.

The latest announcement also comes in the backdrop of the opening up of Myanmar, with which India shares a border. Both nations have expressed keen interest in boosting economic ties. Myanmar takes the chair of the Asean bloc in 2014.

“The process of legal scrubbing is on,” a Malaysian trade official said on condition of anonymity, referring to lawyers going over the various clauses of the deal.

“This process can take weeks or months but we think the deal will be ready for signature in August, when the Asean economic ministers meet in Brunei, which holds the rotating chairmanship of the Asean.”

Source : livemint.com