Business

ASEAN region: Options before India

By Our Special Correspondent

CHENNAI, MARCH 15. Indian industry and exporters should suggest the right option "quickly'' for dealing with the emerging market realities in Southeast Asia, to protect and expand India's share in trade with the ASEAN region as also in China, the Adviser (Economic) to the Commerce Ministry, H. A. C. Prasad, said here today.

The options included going in for free trade agreements (FTAs) with one or more members of the eight-nation ASEAN and setting up ventures in ASEAN to take advantage of the full-fledged implementation of the ASEAN Free Trade Area (AFTA) by this year-end and attracting ASEAN investments in India's special economic zones (SEZs), especially in the hardware sector, to complement India's strengths in software, Dr. Prasad said.

Addressing a seminar on "Emerging business opportunities in Southeast Asia,'' organised by the India-ASEAN-Sri Lanka Chamber of Commerce, Chennai, Dr. Prasad declined to advocate any one of these options, and said whatever decisions were taken should aim at maximising benefits for India, even while accommodating the priorities of ASEAN member-countries.

Such benefits could be in terms of protection/expansion of India's share in trade and competitiveness of Indian products and opportunities in the services sector like information technology (IT), tourism and employment of Indian professionals.

Dr. Prasad said that from this year, a substantial portion of intra-ASEAN trade would be covered by the AFTA's inclusive list, eligible to a duty of zero to 5 per cent within the region. This would affect the competitiveness of certain items in India's export basket, featuring in the 220 thrust products identified in the medium term export strategy unveiled recently by the Government.

The impact of AFTA would fall on Indian exports not only to the ASEAN member-countries but also to other destinations such as the U.S., Europe and Japan. If ASEAN entered into an FTA with China, and if the FTAA (Free Trade Agreement of the Americas, led by the U.S. and Canada and covering North and South America) also became a reality, India's global exports would further suffer.

However, FTAs with ASEAN members would require India to lower its tariff barriers at a time when not much scope existed for further lowering of ASEAN tariffs in response.

But FTAs as also the AFTA option (by investment) could be used to take advantage not only of the market opening within the region, but also overcoming non-tariff barriers (NTBs). ASEAN member-countries' NTBs on Indian products at present included sanitary and phytosanitary standards for meat, rice and egg powder despite the fulfilment of international standards by Indian exports.

The Adviser said Singapore was keen on an FTA with India, but India would have to consider its benefits in return, possibly in terms of deployment within India as also cross-border movement of skilled Indians in sectors such as IT, biotechnology, tourism, engineering consultancy and speciality hospital care.

India should also try to induce ASEAN member-States to become allies in trade negotiations in the WTO in return for special arrangements like FTAs and mutual investment flows, Dr. Prasad said.

K. Ramachandran, former executive director, Asian Development Bank (ADB), highlighted the potential for Indian consultancy in executing multilaterally funded development projects in the less developed among ASEAN member-States like Vietnam, Laos and Cambodia.

K. Pandia Rajan, Managing Director, Ma Foi Consultants, said the potential for use of Indian skill sets in a range of technologies and professions in the ASEAN region as also elsewhere had been neglected as a result of the negative outlook on expatriates as representing "brain drain,'' and these were in fact the "unsung heroes'' in India's foreign trade and balance of payments position.

Send this article to Friends by E-Mail

Business

News: Front Page | National | Southern States | Other States | International | Opinion | Business | Sport | Miscellaneous |
Advts: Classifieds | Employment | Obituary |

Stories in this Section

• ASEAN region: Options before India
• ICICI Bank to replace ICICI in Sensex
• Peaceful Ayodhya pushes up stocks
• Monitor
• Rupee ends higher
• Credit policy on April 29
• Volvo Constn. plans to set up unit
• Lufthansa, SAS, SIA form cargo alliance
• Exchange rates
• Stock Market Index
• Bullion rates

Copyright © 2002, The Hindu. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu