India signs free trade agreement in services, investments with ASEAN

NEW DELHI: India signed a free trade pact in services and investment with the 10-member Association of Southeast Asian Nations ( Asean) on Monday in New Delhi. The accord is aimed at allowing freer movement of professionals and encouraging investment.

"The agreement will help provide market access to Indian professionals in the Asean region including those from the IT/ITeS (information technology enabled services) sector," a commerce department official said.

India signed a free trade agreement (FTA) in goods with the bloc in 2009. India was keen on the services deal as it did not gain much from the pact on goods due to already lower tariffs in the region.

New Delhi feels the services deal will help it reduce the trade deficit with Asean. Negotiations for the deal had begun in 2005.

Asean — comprising Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam — and India are targeting $100 billion in trade by 2015. Nine out of 10 Asean countries have signed the accord, while the Philippines is expected to do so soon after completing domestic procedures.

The services pact signed with Asean covers issues such as transparency, domestic regulations, recognition, market access, national treatment, increasing participation of developing countries, joint committee on services, review, dispute settlement and denial of benefits, a commerce department official said.

The Agreement on Services & Investment had been scheduled to be signed in Myanmar, during the Asean Economic Ministers (AEM) meeting last month. However, commerce and industry minister Nirmala Sitharman had to cancel her visit to Myanmar due to the national launch of the Prime Minister’s Jan Dhan Yojana financial inclusion programme.

India then proposed a circulation process, with each member separately signing the agreement. The deal will come into effect only after all members have signed the pact.

India is also part of the Regional Comprehensive Economic Partnership (RCEP) negotiations between Asean and six partner countries.

RCEP is a 16-member grouping of 10 Asean countries and six others – Australia, China, India, Japan, South Korea and New Zealand – that have free trade agreements with it. The grouping accounts for 40% of world trade.