The Hindu Business Line : `Trade barriers deter better business ties with ASEAN'

Though India and Asean signed FTA in 2003 and the former has already started rationalising its tariff structure, Thailand, Malaysia, Indonesia, the Philippines and Vietnam have not responded.

New Delhi , Sept.26

WHILE Singapore will emerge as a major trade partner for India in the ASEAN in services, banking and legal profession, India's trade prospects with other ASEAN countries such as Thailand, Malaysia, Indonesia, the Philippines and Vietnam will suffer significantly because of protective measures, both tariffs and non-tariffs, which these nations are unlikely to lift until the FTA between India and ASEAN is executed.

These findings have been revealed in a study by the Associated Chambers of Commerce and Industry (Assocham) on `India-ASEAN FTA: Business complementarities, trade advantages and rules of origin' which has been submitted to the Ministries of Commerce & Industry and Finance.

Though India and ASEAN signed the FTA in 2003 and the former has started rationalising its tariff structure, Thailand, Malaysia, Indonesia, the Philippines and Vietnam have not responded, as was desired in rationalising their protective measures against India's exports to them in areas such as transport and electrical equipment, copper products, textile products, cement, rubber, tea, steel, dairy products and refined sugar, says the study.

While releasing the study, the President of Assocham, Mr Mahendra K. Sanghi, pointed out that ASEAN members such as Malaysia, Indonesia, the Philippines, Vietnam and Thailand continue to impose tariff barriers on the aforesaid items of Indian exports ranging from 17.6 per cent to 47.6 per cent.

In textile and watches segment, the tariff exceeds 50 per cent, while, on an average, India's tariff structure against these countries does not exceed 20 per cent. In such a scenario, it will be extremely difficult for India to accelerate its trade prospects with these countries, Mr Sanghi said.

The nine priority sectors identified by the study where integration would help closer cooperation between the India and ASEAN countries include medical research and pharmaceuticals, tourism, infrastructure, energy, food security, information and communications technology, entertainment and educational services. India enjoys strong business complementarities and trade advantage in the above sectors.

Singapore is one country that has rationalised its duty structure as per the expectations of India after the two countries have signed a comprehensive economic and trade agreement, clearly identifying the areas and their duty structure, Mr Sanghi said.

The study points out that India's trade with Singapore currently is close to about $8 billion which will have the potential to more than double because of complementarities that exists between Singapore and India in areas of services, tourism, information and communications technology, telecom and food and food related products.

According to the study, while India's trade with ASEAN has increased to $13 billion and projected to go up to $30 billion by 2007-08, the trade balance remains in favour of ASEAN.

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