Wednesday, August 17

Doubts cloud India-Asean FTA


NEW DELHI: Finally the Asean-India Free Trade Agreement (FTA) came into effect on Jan 1, but with some trepidation on the Indian side, as fears and criticism mount on the trade pact, drafted after almost six years of tough negotiations.

A range of cheaper products — largely from Malaysia, Thailand and Singapore, would soon enter the Indian market, as the three economies will implement the FTA with India, Asia’s third largest economy, from Jan 1 in the first phase.

“We are not against the agreement but fishermen in Kerala are unhappy because imports will affect the livehoods of traditional and small scale fishery sectors.

“Our coastal fish vendors who are mostly women will suffer, if cheaper fish enters our market,” T Peter, president of Kerala Independent Fish Workers Federation, told Bernama in a telephone interview.

About one million fishermen in the southern state of Kerala rely on the sea. In Kerala, there had been strong agitation from coconut, cashewnut and spice growers, who fear the deal, would jeopardize their livehoods, as cheaper products from neighbouring countries enter their market.

Under the FTA, considered the world’s largest, covering a market of nearly 1.8 billion people, tariffs would be gradually slashed for over 4,000 product lines over a staggered period, by 2016, but sensitive products on both sides shielded to some degree.

“The business community supports the agreement, that is a positive significance but there had been lot of criticism from states like Kerala, such as tea and coffee planters.

Now some sectors will surely come under pressure at home.

“Asean will gain substantially from the market access and Asean’s exports to India will increase substantially, but our exports will be modest,” said a senior Indian official familiar with the FTA negotiations.

India’s trade with the three Asean economies stands at US$40 billion (RM140 billion), forming the bulk of the India-Asean total trade volume of nearly US$44 billion (RM154 billion).

But skepticism stills hovers on the deal, as some Indian-Asean watchers believe several domestic sectors will find it hard to compete with the more competitive Southeast Asian players.

“FTA is more political rather than economics.

We have to wait for another five years to see the impact on trade, the economic bite will only come later.

“But for now the statement of intent is more important, the political linkages had been established,” added Prof Manoj Pant, at the Centre of International Trade and Development, in Jawaharlal Nehru University. — Bernama