The economic development is the key factor which transforms a developing country to a developed country. India being a developing nation has to strengthen its trade relation with other countries in order to enhance its economic growth. The free trade between nations will open up new areas for competition and innovation leading to increased investment and acquisition of new market. India’s “Look East” policy (1991) has turned its attention towards East Asian countries which resulted in an initial framework agreement between India and ASEAN (Association of Southeast Asian Nations) in October 2003.After six years of negotiation ASEAN-India Free Trade Area (AIFTA) agreement was signed on August 2009. The AIFTA is a free trade area consisting of the 10 member states of the ASEAN(Indonesia, Malaysia, Philippines, Brunei, Burma, Cambodia, Laos and Vietnam) and India.
The free trade agreement which was concluded in 2010, has helped trade to grow by 41 percent in 2011-12. Trade between India and ASEAN presently stands at roughly US$80 billion. The implementation of the 2012 FTA on services and investments has set annual India-ASEAN trade to grow to US$100 billion by 2015.
Through FTA there was tariff elimination for about 4,000 products between the regions. Duties for 3,200 products will be reduced by December 2013, and duties on the remaining 800 products will be brought down to zero or near zero by December 2016. ASEAN and India have agreed to allow between 7 percent and 9 percent of tariff lines or products to be excluded from tariff reduction commitments.
India’s main exports to ASEAN include: Petroleum products, Oil meals, Gems and jewelry, Electronic goods, Cotton yarn and wool, Machinery and instruments, Primary/semi-finished iron and steel, Transport equipment, Marine products, Drugs and pharmaceuticals, Inorganic, organic, and agro chemicals, Dyes and intermediates.
ASEAN’s main exports to India include: Coal, coke, briquettes, Vegetable and petroleum oils, Electronic goods, Organic chemicals, Non-electrical machinery, Wood and wood products, Non-ferrous metals, metalliferous ores and metal scrap.
Indonesia and India signed a bilateral strategic partnership agreement in which the two countries agreed to increase bilateral trade to $10 billion by 2010. This target was actually exceeded that year with total trade amounting to roughly $12 billion, tripling the $4 billion amount set in 2005.
Vietnam continues to be an attractive investment destination for our Indian companies in sectors ranging from oil and gas, steel, minerals, tea, coffee, sugar and food processing. Our country granted Vietnam the “Most favoured Nation” status .They both have expanded cooperation in information technology and education, and are collaborating on their respective national space programs.
Our Indian government has worked to extend air, land and sea routes to strengthen trade links with Myanmar, in addition to establishing a gas pipeline. In 2001, India and Burma co-constructed a 160-kilometer highway called the Indo-Myanmar Friendship Road to open up a commercial transport. India and Myanmar have agreed to construct a new triangular 4-lane highway running 3200 kilometer through India, Myanmar and Thailand and is expected to be completed by 2016 which will increase our trade relationship with Myanmar.
Indian businesspeople in Cambodia have also established an Indian Chamber of Commerce to promote bilateral trade and investment ties which in turn resulted with a tremendous increase in trade growth from -11.86% (2008-09) to 17.13%(2011-12).
The discovery of oil in 1929 brought a substantial number of Indians seeking their fortune to Brunei. India also signed a free trade agreement (FTA) on goods with Brunei in 2010, which effectively slashed import duties on products ranging from seafood to chemicals and apparel. The main export from Brunei to India has been crude oil, while Brunei predominately imports textile products and vehicle parts from India.
Metals, ores, machinery and electronic equipment account for most of the products imported and exported between India and Laos. India ranks 6th in terms of foreign direct investment in Laos. India has previously invested in Laos’ hydro-power, IT, human resource development and mining sectors.
India and the Philippines have been negotiating to revise and clarify certain aspects of their double taxation avoidance agreement (DTAA), with regard to the taxation of income derived from professional services. The newly revised DTAA is set to be signed sometime this year which will be beneficiary for NRIs in Philippines.
The Early Harvest Scheme (EHS) between India and Thailand functioned as a sort of FTA in goods, services and investments between the countries. The agreement eliminated tariffs on a number of goods, including fruits, chromium ores and concentrates, acrylic polymers, precious and semi-precious stones, jewelry, alloy, iron and steel. India’s trade growth with Thailand has increased from12.89%(2008-09) to27.47%(2011-12).
Singapore, which is now India’s 8th largest source of investment has invested in projects to upgrade India’s ports and airports, in addition to developing information technology parks. Both nations are also working to collaborate on aviation, aerospace engineering, space programs, information technology, biotechnology and energy. Singapore now accounts for 38 percent of India’s trade with ASEAN member nations and 3.4 percent of its total foreign trade. The trade growth between India and Singapore is 50.06%(2011-12).
Malaysia is the 24th largest investor in India and India is the 7th largest investor in Malaysia. Malaysia’s major exports to India include electrical and electronic products, chemicals, metal and palm oil. Malaysia’s main imports from India include chemicals and meat products. India’s trade with Malaysia has a growth rate of 30.24%(2011-12)
India’s trade with ASEAN countries in US $ million
ASEAN Countries
|
Exports 2011-2012
|
Exports 2012-2013(Apr-Sep)
|
Imports 2011-2012
|
Imports 2012-2013(Apr-Sep)
|
Brunei
|
900
|
17
|
800
|
283.7
|
Indonesia
|
7000
|
2500
|
15000
|
7000
|
Malaysia
|
4000
|
2000
|
10000
|
6000
|
Singapore
|
17000
|
7000
|
9000
|
4000
|
Vietnam
|
4000
|
1500
|
2000
|
1000
|
Thailand
|
3000
|
1600
|
5500
|
3000
|
Philippines
|
1000
|
600
|
500
|
250
|
Myanmar
|
600
|
200
|
1500
|
750
|
Cambodia
|
100
|
55
|
8
|
6
|
Laos
|
15
|
6
|
100
|
80
|
India’s Merchandise trade with ASEAN in 2000-01 was 7.06 billion US $, after the implementation of AIFTA there has been a drastic change in the trade turnover which increased to 79.27 billion US $. Though it took six years of negotiation to form AIFTA now it has become a fruitful source of revenue to India
Article By
K. Sakthi Sindhu
Ist MIB
PSGCAS
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