'Industry not enthused with Asean goods FTA' Ficci survey

Industry has not reaped many benefits from the FTA even as imports from ASEAN have increased

The industry has not reaped many benefits from the free trade agreement (FTA) that was signed between India and the 10-member Association of South East Nations (Asean) in 2011 even as imports from the region have increased, according to a survey by Ficci. The FTA with Asean, which came into effect from August 2011, was not able to prove its effectiveness in giving Indian companies the necessary leverage.

However, the survey did note that doing business with ASEAN is ‘easy’ for Indian companies.

The Asean region consists of 10-member countries of Singapore, Thailand, Vietnam, Malaysia, Indonesia, Myanmar, Brunei, Philippines, Laos and Cambodia that makes the economic bloc.

The FTA covers a market of 1.8 billion and it is expected to slash import tariffs on over 4,000 product lines.  India will also lift import tariffs on more than more than 80 per cent of traded products between 2013 and 2016.

“The full benefits of the India-ASEAN goods FTA are yet to be seen. This is evident from trade between India and ASEAN which has stagnated under $80 billion for the last two years, though we are targeting $100 billion by 2015,” the survey noted, which was conducted on companies in sectors such as pharmaceuticals, automotive, manufacturing, plastics, chemicals, consulting services, infrastructure and construction, healthcare, agriculture products, mining and minerals and services.

The survey also noted that some of the main impediments that Indian firms continue to face in ASEAN and which the FTA has not been able to address relate to labour norms, licensing processes, registrations, quotas, especially with countries like Indonesia, Philippines, Thailand and Malaysia.  

A major bottleneck faced by those companies that do business with CLMV (Cambodia, Laos, Myanmar and Vietnam) countries is movement of funds.

FICCI also stated that in countries such as Indonesia, Philippines and Vietnam, regulatory issues act as a major hurdle for doing business there, an area where the FTA again has failed.