One More Step Towards An ASEAN-India FTA
Radio Singapore International, 3 October 2003

(Transcript of a radio interview with 
Mr Dilip Chenoy, Dy Director General, Confederation of Indian Industry)

India will reportedly sign an economic framework agreement with ASEAN during a regional summit in Bali next week.

The draft agreement is expected to lead to a full free trading area within 10 years.

India and the ten-member ASEAN grouping are aiming to increase trade from the current annual level of 10 billion dollars to 15 billion dollars in the next two years.

Analysts say that this is part of ASEAN's efforts to counter China's growing economic clout in the region.

For more on the potential of an India-ASEAN Free Trade Agreement, Bharati Jagdish (BJ) spoke to Dilip Chenoy (DC), Deputy Director-General of the Confederation of Indian Industry in New Delhi.

DC: "Last year, at the ASEAN leaders summit, Indian Prime Minister Atal Bihari Vajpayee had set the tone by saying that India would sign an FTA with ASEAN by the year 2010. So over the last one year, officials on both sides have been working to draw out the various elements of an FTA. These would cover different items and areas of interest for ASEAN and India, the different tariff rates that would be applied and the sequence of steps towards reaching a full FTA status between ASEAN and India."

BJ: Now, what is overall potential of an ASEAN-India FTA. What does each side stand to gain from this?

DC: "If you look at current India-ASEAN trade, it's around 10.06 billion dollars. Now, the potential between the two is enormous and the Prime Minister of India has set a target of 15 billion in the next two years. This Free Trade Agreement will actually serve as a vehicle to realise that potential and possibilities between India and ASEAN."

BJ: Now, ASEAN is a large grouping of ten nations. Are there some countries more than others that India will benefit from?

DC: "Actually, if you look at India's trade with ASEAN, over 90 percent of India's trade with ASEAN is focussed on four countries, which are Malaysia, Singapore, Thailand and the Philippines and a little bit of Indonesia. Therefore, the other five countries within ASEAN stand to benefit tremendously with this FTA, because it will enable them to access the Indian market and also enable them to selectively provide access to Indian goods and services in their own markets so that they can benefit from what India has to offer. It is interesting to understand that the trade balance between India and ASEAN is actually in ASEAN favour. So what this whole agreement will actually do is provide an opportunity for diversification of trade for enhancing trade to look at new areas and new products."

BJ: What are the new areas and new products that we could be tapping into in the future?

DC: "If you look at the new areas that have been identified, they include the chemical sector, other areas in the agriculture and food processing sector, specific items in the manufacturing sector and also some specific items in the electrical and IT sector."

BJ: Now, what are the potential hiccups that ASEAN and India could face in the lead-up to actually inking this FTA?

DC: "Well, currently ASEAN is also negotiating an FTA with China. ASEAN also had negotiated an internal preferential trade agreement among the ASEAN nations. So if we're looking at this whole process, what we need to do is to get a consensus among the different countries within ASEAN on the products and the different items that will be included in this FTA. The consensus-building is the real challenging part of it. If there is no consensus among the ASEAN countries, then you might not see a full-blown FTA - an FTA with some products and services missing."

BJ: Do you foresee any specific countries being unwilling to compromise on certain issues? 

DC: "Each country may have its own peculiar issues. As we saw while the internal ASEAN agreement was being discussed, some countries had a problem with automobiles, other countries had a problem with some electrical items, so that's something which we will see as we move forward."

BJ: On ASEAN's part, this move is seen as part of the grouping's effort to counter China's growing economic clout in the region. What's India's strategy here? How will this economic alliance with ASEAN benefit India?

DC: "We don't see this as a means of countering any other country's strategy in the region. Actually, in 1993 the Prime Minister of India announced the "Look East" policy. This year would be the tenth anniversary of that announcement. We see this as a whole integral part of India's external relationship with the East. We don't see this as an "India versus China" or an "India balancing an ASEAN-China" strategy."

Dilip Chenoy (DC), Deputy Director General of the Confederation of Indian Industry in New Delhi, speaking to Bharati Jagdish (BJ).

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