India and Malaysia signed a ‘comprehensive economic co-operation agreement' on Friday paving the way for a phased elimination of tariffs on a range of commodities, bringing to fruition efforts that began in 2004.

However, the CECA goes beyond elimination of tariffs — it contains provisions that facilitate investments and even movement of natural persons.

The agreement was signed here by the Commerce and Industry, Mr Anand Sharma, and Malaysia's Minister of International Trade and Indiustry, Mr Mustapa Mohamed.

Essentially, as a result of the agreement, imports from Malaysia of products such as palm oil, fruits and synthetic textiles will be (eventually) duty-free, and therefore cheaper. India will be able to export products such as mangoes, basmati rice, cotton, trucks and motorcycles, duty-free.

But to enjoy preferential tariffs, exporters must ensure that at least 35 per cent of the raw materials are obtained from either Malaysia or India.

In 2009-10, India's trade with Malaysia amounted to $9 billion (of which, exports were $6.5 billion). The target for 2014-15 has been fixed at $15 billion.

Services too

Being a comprehensive agreement, it also covers services. Indian IT, healthcare professionals, engineers and accountants “will now find it easier to gain temporary entry and perform contractual work in Malaysia.” Similarly, Malaysian companies engaged in construction activities in India, will find it easier to secure temporary work permits for Malaysian workers.

Even purely in ‘trade', the CECA is an improvement upon the India-Asean Free Trade Agreement (FTA) that came into force on January 1, 2010. The improvements are basically in terms of reduction of duties.

Speaking after the signing of the MoU, Mr Mustapa Mohamed observed that historically, the engagement between the two countries has been “narrow”, with India's interest in Malaysia being confined to palm oil and paper and pulp industries and Malaysia's interest in India being largely construction-centric.

Steel, hotels

Later, the Minister also interacted with the delegates of the Confederation of Indian Industry. The leader of the delegation, Mr B. Muthuraman, President-designate, CII and Vice-Chairman, Tata Steel Ltd, said that the Tata group was keen on selling trucks to Malaysia, as well as building hotels there. Tata Steel itself, he noted, had not been active in Malaysia but was keen on partnering with Malaysian steel companies.

The reference to hotels was welcomed by Mr Mustapa Mohamed who said that Malaysia, which is keen on marketing its tourism potential, needed more hotels. He observed that last year, 700,000 Indians visited Malaysia, nearly a fifth more than in the previous year.

Mr R V Sheshan, CEO, MAS GMR Aerospace Engineering Company, said that the GMR group was interested in building ports in Malaysia. Mr Manish Singhal, Executive Director, BEML, said that the Indian public sector company wanted to make metro coaches for Malaysia.

Related Topics
comment COMMENT NOW