According to the Indian government sources, the India-ASEAN FTA will be a reality in the forthcoming ASEAN Summit in October as all outstanding issues had been sorted out by both parties. Although India and ASEAN had concluded the talks for the landmark FTA in late last year after six years of discussions, it got delayed owing to several events including the standoff between Thai government and protestors during the scheduled summit last December.
A free trade deal with ASEAN member states has strategic importance to India since the country exports 12 percent to these states and imports 10 percent. The FTA is expected to increase the trade from the current $40bn to $50bn by next year.
Indian officials said that there were plans to even sign the India-South Korea Comprehensive Economic Partnership Agreement (CEPA) along with the ASEAN FTA. The South Korean representatives are expected to attend the upcoming summit to engage in talks with the ASEAN members as well as concluding the formalities on CEPA with India.
Both trade deals require Indian cabinet approval, and would be the first such approval by the United Progressive Alliance after returning to power consecutively for the second time. The FTA had earlier missed the April date due to parliamentary elections in India.
The talks between India and ASEAN were stalled several times as the association insisted on cuts in tariff twice a year. But in the recent talks, India was able to convince the ASEAN members on duty cuts once in twelve months, and the same will be reviewed every January. As per the deal, duty to be cut for the highly sensitive products including tea, coffee, pepper, crude and refined palm oil is between 30 and 45 percent by Dec 31, 2019.