India and the 10-member Association of South East Asian Nations (Asean) signed a free-trade agreement on Thursday, paving the way for setting up a common market.
This will give the 1.7 billion people in these 11 countries the option to choose from a plethora of products across borders.
Starting from January 1 next year, the agreement will gradually eliminate import duties on a host of manufacturing products over the next six years.
Products from Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Thailand, Singapore and Vietnam will enter Indian markets and vice versa.
Both sides, however, have also drawn up a ‘negative list’ of products that would be outside the purview tariff reduction regime, so as to protect certain categories of domestic producers.
India has kept 489 items outside the trade pact, mostly farm products, textiles and automobile components, thereby protecting these sectors.
“Bilateral trade between India and Asean was more than $40 billion (almost Rs 200,000 crore,) or 9.6 per cent of India’s total trade,” a commerce ministry statement said. “We have set a target of achieving bilateral trade of $50 billion (Rs 240,000 crore) by 2010.”
The agreement has been in the making since 2001, but made slow progress following much opposition to the eliminating of tariffs on products like palm oil, tea, rubber and coffee. Many political leaders, specially from Kerala, feared it might ruin the state’s plantation and marine products industry.
“India has competitive advantages in terms of cost and expertise in a range of areas,” said Ficci secretary general Amit Mitra. “The agreement will benefit us.”