India moves toward ASEAN free-trade deal

India moves toward ASEAN free-trade deal

Reuters, Singapore

India will sign a framework agreement with the Association of South East Asian Nations (ASEAN) at its summit next week, leading to a full free trading area within a decade, the Financial Times said on Thursday.

The pact was negotiated over the last year and would be signed with the 10-member group at the annual summit, set for Bali in Indonesia next week, Indian Foreign Minister Yashwant Sinha told the newspaper.

"We are getting much more deeply engaged in southeast Asia," he was quoted as saying in an interview in London. "This will certainly boost our trade and economic relationship with the region."

Progress on negotiating the framework agreement with ASEAN had been unusually rapid by Indian standards, signaling the importance of the deal as India has watched China's trade with ASEAN grow dramatically over the last decade, it said.

ASEAN also wants to counterbalance China's growing economic clout in the region by boosting ties with India. Indian exports to ASEAN were US$4.8 billion last year, just eight percent of total exports.

"If we have regional trading agreements with ASEAN, they will become beneficiaries of lower tariffs with India," Sinha said.

India has been criticized for helping to bring about the collapse of the trade talks in Cancun last month, and critics say it sets higher tariffs on developing country imports than Western ones.

Asean, which groups Brunei, Laos, Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Vietnam, Singapore and Thailand, will hold its annual summit on Oct. 7 and 8.