New Delhi: After signing a free trade agreement (FTA) that will eventually lead to duty free commerce for bulk of the trade, India and the 10-nation Association of Southeast Asian Nations (Asean) bloc are set to start talks for opening the crucial services sector.
“Negotiations for the free trade pact (between India and Asean) on services sector will begin soon,” ambassador of Thailand Krit Kraichitti said. He, however, said given the complex nature of issues involved among India and ten countries of South-East Asia, it would take about two years for the negotiations to conclude.
Services sector is of key interest to Indian economy as it contributes over 55% to the gross domestic product.
Trade pact: Delegates at the Asean meet in Thailand in July. India last month signed an agreement with Asean for the duty-free import and export of 4,000 products, ranging from steel to apparel. Pornchai Kittiwongsakul/Bloomberg
It is also emerging as an important area for export earnings for the country. But the sector faces hurdles such as harsh domestic regulations, including those relating to visa, and the complex tax regime.
Noting that the services sector is “very important” to multiply trade and investment between Asean countries and India, the Thai ambassador said “safeguard measures” will have to be incorporated before finalizing the pact.
“Services sector is very important. The pact will benefit all,” he said, but added that there would be safeguards built into the agreement, which will have to be “finalized carefully”.
Seeking greater trade ties with India, Kraichitti said the Indo-Asean FTA, to come into operation from 1 January next year, would not only enhance the regional trade but also bilateral trade between India and Thailand.
He hoped that India’s ‘Look East Policy’ combined with Thailand’s ‘Look West Policy’ would give a quantum jump to annual bilateral trade which now stands at around $6 billion.
India last month signed an agreement with Asean for duty-free import and export of 4,000 products, ranging from steel to apparel to sugar and tobacco, over a period of eight years.
The pact on trade in goods under the comprehensive economic cooperation agreement was signed after six years of negotiations.