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India says close to clinching ASEAN free trade deal

business Updated: May 04, 2008 03:00 IST
Reuters
India says close to clinching ASEAN free trade deal

India is close to clinching a free trade deal with Southeast Asian nations, spurred on by a bleak global economic outlook and rising food prices, Trade Minister Kamal Nath said on Saturday.

"We are on the last mile and in the final stage of conclusion," Nath told Reuters after meeting his counterparts from the 10-member Association of Southeast Asian Nations (ASEAN) on the resort island of Bali.

"We hope it could be concluded in the next three months -- there is no major obstacle," he said, adding that a dispute with Indonesia over palm oil would be resolved.

Indonesia, the world's top palm oil producer, has been insisting on having wider access to India's palm oil market as a condition of removing its opposition to a free trade agreement with India, according to media reports.

"We are going to resolve that, because with the world food situation and the global economic outlook in the United States and Europe which is bleak, it's therefore even more important for regional integration," Nath said.

The issue of rocketing rice prices and food security has overshadowed the meeting of ASEAN economic ministers, which aims to deepen regional economic integration and spur long-delayed world trade talks.

Nath said India's bumper rice harvest this year would boost supply and he sought to defend the country's move to curb rice exports, which has been blamed for contributing to soaring global rice prices.

"We have a very large domestic population -- we have banned exports of the certain type of rice but we have allowed exports of other types," he said.

"The region's rice-growing countries must look at increasing productivity and having better storage and less wastage."

Turning to the domestic economy, he conceded it would be a tough battle to tame inflation as food and energy costs soar.

"We hope that we will be able to contain inflation, but inflation is a major challenge," he said, adding that the authorities have to curb money supply while treading carefully not to put a brake on economic growth.

The Reserve Bank of India said this week it was raising the cash reserve requirement by 25 basis points to tighten monetary conditions to help curb inflation, the second such move in less than a month.