India, Asean closing FTA gap, says Indonesia

Indonesian Trade Minister Mari Elka Pangestu has said there has been forward movement on duty reduction in sensitive farm products like palm oil during talks for the India-Asean Free Trade Agreement.

"I understand there has been progress on this. There are compromises which are being worked out. India has already made some compromises and we hope there is a solution to this," Pangestu told Business Standard.

Negotiators from both sides recently met in Bhopal to iron out differences on issues like duty reduction by India on sensitive products like palm oil, tea, coffee and pepper as well as the list of items on which there will not be any duty cuts.

Two more rounds of talks are scheduled in February and April, respectively, and the FTA is expected to be inked by July.

Pangestu said the negative list of goods on which there would be no duty cuts remained an issue on both sides. "Both sides have to sit down and make sure that market access is not prohibited," she said.

India has put 489 items on the list, while the Asean is still to finalise its list, which is expected to cross 1,200 products.

Pangsteu said a joint group was studying the prospects of an India-Indonesia FTA. "In 2006, our trade volume was around $4.5 billion, while in 2007, we expect this to go up to $6 billion. We want to increase this to $10 billion by 2010. For this, we need to maintain existing trade relations as well as increase trade diversity," she said.

She said both the countries would have to look at non-commodity and diversified areas, including services such as IT, education and health.

Meanwhile, many Indian companies are looking at Indonesia to source coal. "Last year, Tata acquiried 30 per cent stake in Bumi Resources, which is a promoter of the largest coal mine in Indonesia . We hear that a large number of Indian companies are now looking at Indonesian coal mines," she said.