India signs economic deals with Malaysia

India signs economic deals with Malaysia

PUTRAJAYA, Malaysia (Reuters): Indian Prime Minister Atal
Behari Vajpayee signed a raft of bilateral economic agreements on
Monday at the start of a three-day visit to Malaysia.

Vajpayee, who arrived on Sunday with Information Technology
Minister Pramod Mahajan and a 75-member business delegation, also
held talks with Prime Minister Mahathir Mohamad.

The leader of the world's largest democracy, Vajpayee was
earlier officially welcomed by Mahathir, Asia's longest-serving
elected leader, at the new administrative capital of Putrajaya on
the outskirts of Kuala Lumpur.

India and Malaysia signed one deal where New Delhi would
accept palm oil as payment for carrying out a $1.5 billion
railway project in Malaysia.

"The overall value of this project is expected to be over $1.5
billion, the largest ever to be awarded to an Indian company
abroad," according to a summary of accords signed between the two
countries.

Malaysia, the world's top palm oil producer, offered New Delhi
a contract involving dual tracking and electrification of rail
lines from northern Ipoh city to Padang Besar at the border with
Thailand. This was in return for more palm oil purchases by
India, the world's largest edible oil importer.

The two countries also signed a deal allowing Malaysian firms
to invest, construct and manage sea ports in India, and another
waiving visa requirements for their diplomats and government
officials.

India, emerging as a global software power, will also be
looking to take advantage of Malaysia's infrastructure facilities
in its high-tech Multimedia Super Corridor, industry leaders
said.

"I think bilateral relations are at a stage of take-off.
Economic reforms in India have opened up new avenues for
investment," Indian High Commissioner to Malaysia Veena Sikri
told Reuters ahead of the visit.

Analysts say India is keen to woo foreign investment, more of
which has traditionally flowed to neighboring China and other
east Asian countries.

Malaysian Foreign Minister Syed Hamid Albar said India was
firm on its commitment to consider a cut in palm oil import
duties.

"I think the Indian government has given a positive answer
that they'll look into the import duties, with the possibility of
reducing the import duties based on whatever constraints they
face," Syed Hamid told reporters after talks between the Indian
and Malaysian delegations.

India ruled out a cut in palm oil duties just last Friday,
dashing hopes of traders in Malaysia and Indonesia, the world's
biggest producers.

In February, India slapped its heaviest-ever import duty of 75
percent on crude palm oil and 85 percent on refined palm oil.

Vajpayee, who underwent knee surgery in October, did not
inspect the guard of honor at the welcoming ceremony, but he
greeted dignitaries and posed for a group photograph with
Mahathir.

Both leaders stood for their countries' national anthems by
the Royal Malaysian Navy band in bright sunshine outside
Mahathir's Putrajaya office.