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Given the huge, unexploited markets that exist on both sides, there will be no big hurdles in the way of India-Asean economic ties attaining impressive levels in the next five years.
There is little doubt that the just concluded Free Trade Agreement (FTA) between India and the Asean group of countries will increase the volume of bilateral trade in goods substantially. The current trade between the two entities of around $38 billion (it grew by as much as 25 per cent in 2007-08) is expected to increase to around $50 billion by 2010, consequent to the FTA. The future of bilateral trade in goods is therefore bright. One significant pointer here is how Ind ia-Sri Lanka trade more than doubled in the first four years after the signing of the FTA in March 2000. Admittedly, an FTA can add even more substantially to the trade between economic structures that are complementary in nature. As the Singapore Trade and Industry Minister, Mr Lin Hng Kiang, made it clear at the India-Asean Ministerial meeting on Thursday, the potential for a healthy trade exchange could have been much higher if the "economic structures" of the trading partners were not as similar as they indeed are. Even so, given the huge, unexploited markets that exist on both the sides, it can be expected that there will be no big hurdles in the way of India-Asean economic ties attaining impressive levels within the next five years. It is of course to be hoped that, in the course of expanded trade, Indian exporters will gain as much as their counterparts on the other side, which will depend directly on the competitiveness of Indian products and also on the concessions that have been extended by the Asean countries to Indian exports. As of now, New Delhi appears to have made substantial concessions to the demands of some of the Asean countries (such as Malaysia and Indonesia), particularly with regard to products such as palm oil, tea, coffee and pepper, in order to get the FTA off the drawing board. It is hoped that similar concessions have been offered by the other side in such areas as, say, auto ancillary exports. Of particular interest would be details of the concessions Indonesia has made to increase market access for Indian products generally.
Clearly, the full potential of India-Asean economic cooperation will be attained only when the ambit of such cooperation is extended to spheres like services and investments. In fact, this is the next initiative that will be taken up by the two sides, the services area holding special interest for India because of its inherent strengths in the sector. The FTA negotiations took more than five years to produce a result; it is to be hoped that investment and services will come on board in a much shorter span of time.
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