JOIN USThere is new hope of India playing a pivotal role in guiding South-East Asian trade equations pursuant to the Free Trade Agreement (FTA) on services and investments finalised between India and the Asssociation of South East Asian Nations (Asean). A bilateral trade pact with the Asean bloc, with whom India chalked up trade worth $79 billion in 2011-12, will be crucial to driving growth in sectors like commodities, especially tea, seafood and spices exports, automobile components and finished vehicle units. Tariff structures on key export items like seafood have been lopsided with the phased reduction of import duties on Indian exports not enthusing the trade sector. A faster phaseout of the duty regime, currently 10 per cent, is desirable for new seafood export markets to emerge. Intra-Asean trade links are complex. While China is a major market for Indian seafood exports, much of the raw processing is done in Thailand.
India’s export associations and commerce bodies must lobby with Asean governments to set up more trade centres to facilitate faster clearances for Indian goods in transit. Exporters are still complaining of clearance delays in Asean countries like Thailand and Malaysia leading to quality deterioration of time-sensitive products like seafood, spices, condiments and certain canned foods. The FTA must sort out the issues of tariff phaseouts and expediting of clearances for Indian products before the bilateral trade pact comes into effect from August 2013, and ahead of the Regional Comprehensive Economic Agreement in 2015.
The trade pact will be significant for the services sector which contributes around 55 per cent of India’s GDP, as it will encourage greater cross-border movement of professionals across Asean markets. From a geopolitical standpoint, trading powers like Japan and South Korea are worried about China’s growing influence in the South China Sea area and territorial disputes with these nations. India can now more actively collaborate with Asean nations to ensure that the South China Sea and the Straits of Malacca do not capitulate under China’s hegemonistic shadow — much of China’s fuel and energy supplies are routed through these two channels. The refashioning of ties with Asean should also pry open the latent export and development potential for largely neglected parts of the country, including central India and the North-East.