India has signed the free trade agreement (FTA) in services and investments with the 10-member Association of Southeast Asian Nations (Asean), two years after the discussions on the pact concluded.
The move is expected to pave the way for freer movement of professionals and further open up opportunities for investments. The country had implemented the FTA in goods with Asean members in 2010, while it had concluded the negotiations for FTA in services and investments in 2012. With the signing of the pact in services and investments, the FTA will now become a comprehensive economic partnership between the two sides.
The agreement was scheduled to be signed last month at the meeting of the Asean economic ministers in Myanmar. However, the pact could not be sealed as commerce minister Nirmala Sitharaman called off her trip due to “domestic compulsions”.
A government official told The Indian Express that except for Philippines, every country has ratified the deal. Asean comprises Singapore, Malaysia, Laos, Cambodia, the Philippines, Brunei, Vietnam, Myanmar, Thailand and Indonesia.
The official added that Mode 4, i.e. the movement of professionals, has also been incorporated in the agreement, something which will immensely benefit Indian professionals like chartered accountants and those from the IT and ITeS sector.
The Philippines had earlier raised concerns that opening up of the services sector may have an adverse impact on its own services industry given India’s strength in the same.
The erstwhile UPA-II government came under criticism for allegedly signing free trade agreements in haste and losing out on the benefits provided by the same. The critics had argued that while imports from Asean countries had increased, exports to these nations from India was not significant, bringing the FTAs under scanner.
In December last year, the Cabinet had approved the FTA in services between India and the Asean. Unlike in India, Asean members have to approach their respective Parliaments for ratification of such pacts.
However, following the criticism, the commerce department undertook a study to gauge the impact of the FTAs on India’s trade. India has signed FTAs with countries including Korea, Japan, Singapore, Thailand and Indonesia.
Trade between India and the 10-member bloc stood at about $76 billion in 2012-13. Both sides aim to increase it to $100 billion by 2015 and envisage lifting import tariffs on more than 80 per cent of traded products by 2016.
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