FTA gives big boost to Asean-Indian trade

"Trade should grow significantly after the pact's implementation next year. This marks another step in bolstering trade growth with our partners," said Commerce Minister Porntiva Nakasai, who chaired the 41st Asean Economic Ministers Meeting.

This is the fifth FTA signed by Asean, following agreements with China, Japan, South Korea and Australia/New Zealand.

A joint statement by Asean and Indian ministers said the FTA had come at an appropriate time as part of the region's response to global economic downturn.

The ministers also expect progress to be made in negotiations over services and investment in October, in order to turn it into a comprehensive pact.

Import tariffs for 71 per cent of Asean-Indian trade in goods will be gradually cut to zero by 2013, while those for another 9 per cent of trade will be lowered to zero by 2016.

The tariffs on 500-600 items on sensitive lists will be reduced to 5 per cent by 2016, while import duties on five "highly sensitive" items - palm oil, refined palm oil, coffee, tea and pepper - will be brought down from 70 per cent to 45 per cent by 2019.

The tariffs for 489 items will remain unchanged.

Amit Mitra, secretary-general to the Federation of Indian Chambers of Commerce and Industry, said private enterprises were delighted with the planned liberalisation, as it would create win-win benefits for both sides.