Cambodian commerce minister Cham Prasidh (left) with his Indian counterpart Anand Sharma in New Delhi on Tuesday. (AFP)
New Delhi, Dec. 18: India and Asean are expected to announce a free trade agreement in services and investments on Thursday, which will help the country’s information technology, BPO and financial sectors.
Analysts said the pact would open up a huge market, bigger than the US and the European Union, for the services sector, which contributes over 55 per cent to the country’s gross domestic product. India is the tenth largest services exporter in the world, while Asean is an importer.
“We will definitely conclude it. We are duty-bound to report to the heads of states and heads of the governments who shall formally make the declaration on December 20,” commerce and industry minister Anand Sharma said.
India and Asean — which comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam — had signed a free trade agreement (FTA) in goods in 2010.
Sharma said the existing FTA with the Southeast Asian group had led to a 30 per cent rise in annual trade, which could touch $100 billion by 2015. “We are aiming that trade between the two sides will touch $100 billion by 2015.”
At present, trade between India and Asean stands at $80 billion.
“When the FTA with Asean was signed in 2010, it was felt to be one-sided as it opened up goods, but not services, which is one of the main strength of the country. Immediate benefit will be felt by the IT, BPO and financial services sector,” said Anis Chakravarty, an economist with Deloitte. “We have to wait for the fine print to estimate the amount of benefits for different sectors over a period of time.”
The country, however, could face competition in the BPO segment from the Philippines, which has a substantial market share.
Studies suggest Indian companies can bid for construction projects such as bridges, canals, roads, school buildings, sports facilities and water-treatment plants in the Asean region.
Prospects in services such as telecommunications, radio, television, consultancy, architecture, law, accounting, education, health and social work are also bright for Indian entrepreneurs. Once the FTA becomes fully operational with all the countries of the bloc, Indian businessmen will reap more benefits in sectors such as chemicals, pharmaceutical, textiles, handicrafts and carpets.