One
of the most important economic groupings in Asia is Asean,
and its relation with India, a burgeoning developing country,
is all the more significant. The member countries of Asean
are diverse culturally and economically, although their major
products include electronic goods, oil and wood. Asean has
always tried to link itself with major powers of the world
and the same reason can be applied to its interest towards
an FTA with India. India is gaining dominance in the science
and technology areas and is also predicted to be the third
biggest economy by 2050, after the US and China. All these
reasons point to the fact why Asean cannot afford to ignore
India. However, there are many ways in which India will be
benefitted from the FTA. India's engagement with Asean can
boost the country's economy and improve its foreign trade.
IndoAsean
trade in 200304 was about US$13.25 bnover five times the
199394 trade figure of US$2.5 bn. India's exports to Asean
were US$5.8 bn while imports were about US$7.4 bn in this
period; balance of trade was in favor of Asean. India's exports
to Asean include oil meals, gems and jewelry, meat and meat
preparations, cotton yarn, fabrics, madeups, engineering
goods, transport equipment, machinery and instruments, electronic
goods, marine products, fruits and vegetables, rice, drugs
and pharmaceuticals, chemicals, etc. India's trade with the
world in 2004 stood at US$142 bn, Asean accounting for 9.34%
of India's global trade, up from 8.56% last year. However,
based on the availability of data for Asean's global import,
India's exports to Asean in different product groups are much
below the potential. The proposed FTA with Asean will create
a market of over 1.5 billion population with a combined GDP
of $1.2 tn.
The
main significance of the IndoAsean FTA for India is that
it will facilitate and allow the liberated movement of goods
and services, either for free or at reduced tariffs, reduced
customs duties, and reduced import duties. It will also promote
Foreign Direct Investment (FDI) in India as more and more
companies and investors from Southeast Asian regions would
be willing to invest in India. India will also be able to
improve its technology and services sector. Another significance
of the FTA for India is that the manufacturers and the producers
of goods and services will be exposed to a highly competitive
market, compelling them not only to reduce the prices of their
goods and services but also to improve quality thereof. In
a nutshell, this FTA will boost foreign investment and will
give a fillip to research and development activities. |
