Indian Economy News

India, Asean aim to double trade target to $200 bn by 2022

  • Livemint" target="_blank">Livemint
  • March 12, 2015

New Delhi: As the 10-member Association of Southeast Asian Nations (Asean) looks to coalesce into an economic community with a single market and production base at the end of this year, India is looking to deepen its interaction with the region with further liberalized tariff lines and a maritime transport pact.

Indian foreign minister Sushma Swaraj, inaugurating an India-Asean meeting attended by policymakers and think-tanks from both sides on Wednesday, said India shared maritime boundaries with many Asean countries, which was important from a trade perspective.

“We have started negotiations on an Asean-India maritime transport cooperation agreement, and hope that it will be finalized by the end of the year,” she said, noting that bilateral trade had crossed $76 billion in 2013 and that it was largely balanced, reflecting the strong complementarities between the Indian and the Asean economies.

The trade target for this year is $100 billion and both sides are aiming to double it to $200 billion by 2022, Swaraj said adding: “We will have to significantly augment the utilization level of the agreement on trade in goods (signed in 2009) and further liberalize the tariff lines. I am glad that the process has started to revive the Asean-India trade negotiations committee to kick-start these discussions.”

India, she said, was focused on reorienting its partnership with Asean to “make it more pragmatic, action-driven and result-oriented. For this, we need to intensify our cooperation in security, trade, investment, connectivity and capacity building and strengthening people-to-people linkages.”

India began its interaction with the Asean in the early 1990s with the launch of its Look East policy.

It was mainly aimed at increasing economic engagement and interaction between India—especially its underdeveloped northeasterrn region—and Asia’s high growth economic grouping.

In her speech, Swaraj described India’s Northeast as a “land-bridge to the Asean” and added that India was looking at expanding air connectivity between the region and Southeast Asia.

Starting out as a sectoral dialogue partner in 1996, India was elevated to a strategic partner of Asean in 2012.

Swaraj noted that two-way investment flows were “substantial,” with the Asean accounting for approximately 12.5% of investment flows into India since 2000.

Indian investments in Asean over the last 7 years topped $31 billion, while foreign direct investment equity inflows in India from Asean over the same period crossed $25 billion, according to Indian government figures.

With Prime Minister Narendra Modi launching the Make in India campaign to boost India’s manufacturing base, “Asean companies could look for investments in a large number of sectors such as smart cities, roads and highways, ports, railways, power and urban infrastructure. The India-Asean agreements on trade in services and investment (expected to come into force in July) will also unleash large potential for mutual investment.” she said.

On increased connectivity, Swaraj said India was engaged in several projects like the trilateral highway project that was looking at “seamless connectivity” from Moreh in Manipur in the Northeast to Mae Sot in Thailand through Myanmar.

“We have also started negotiations on an India-Myanmar-Thailand Transit Transport Agreement to address soft connectivity issues,” she said.

Another project is the Kaladan multimodal transport project for a road and riverine link between Myanmar and Mizoram.

In his comments, Thai deputy prime minister and finance minister Tanasak Patimapragorn described India as a “strong” Asean partner, noting that the two sides had a combined gross domestic product of $4 trillion.

“We are excited about India under Prime Minister Modi,” he said, adding that his country was ready to be India’s gateway to Southeast Asia. “Conversely, India can be Thailand’s gateway to South Asia and Middle East,” he added.

The Thai deputy prime minister later held talks with Swaraj and defence minister Manohar Parikkar, a person familiar with the development said.

Swaraj would be visiting Thailand in June, the person added.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.