India has formally signed the Free Trade Agreement (FTA) in services and investments with the ten-member Asean bloc for greater flow of investments and easier movement of workforce between the two regions.
Lost bargaining chips The two separate pacts, one on services and the other on investments, were to be signed in the India-Asean meeting in Myanmar last month, but got delayed as Commerce and Industry Minister Nirmala Sitharaman could not attend it.
The signing of the agreement in services and investment is reflective of India’s deep commitment to have a strong institutional architecture for economic ties with the Asean, an official said.
India already has an FTA on goods with the Asean, which was signed in 2010. As New Delhi agreed to sign the goods pact much before the services and investments agreement, instead of signing a single pact with all three elements as originally planned, it lost much of its bargaining power in services, some critics say.
The services agreement includes commitments on market access, domestic regulations and mutual recognition of qualifications of professionals, but individual Asean countries have offered different levels of market opening to India. The bloc includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
Wary of India “While countries such as Malaysia and Singapore, with which India has separate FTAs, are more comfortable with higher levels of liberalisation, others like Vietnam and Philippines are more closed and fear competition from the English-speaking Indian workforce. Hence, the ten countries have given offers based on their levels of comfort,” a Government official told BusinessLine .
India, on the other hand, has given three different schedules of commitments — one for Vietnam, another for Philippines and a third for all other members.
All commitments taken by Asean countries and India are more than what they have committed to under the General Agreement on Trade in Services of the World Trade Organisation.
A brief annexure on movement of natural persons or workforce – a key area of interest to India – has been included in the Agreement. It defines business visitors, intra corporate transferees and contractual service suppliers.
“This will help provide commercially meaningful market across in Asean for our professionals, including those from the IT/ITeS sector,” the release said. Independent professionals, however, have not been defined.