A FICCI survey, titled ‘Business Beyond Barriers’ to ascertain factors impacting trade & investments between India & ASEAN and the effect of India-ASEAN FTA on Indian Industry reveals that half the respondents feel that the FTA in ‘Goods’ has had either no impact on their exports or an adverse impact. This is attributed in partly to the fact that this FTA is restricted to ‘Goods’ where India’s manufacturing sector is not able to capitalise and partly due to lower duties offered by ASEAN to China, through the China-ASEAN FTA.
As for imports into India, the survey indicates that 35% of the respondents acknowledge that current FTA in goods has a positive impact on their imports into India due to duty reductions by India, which helps to reduce input costs. The remaining 65% felt that liberalized import regime has not had any impact on their business. Going forward, most companies do not foresee any adverse impact of lower import duties for products from ASEAN. The reduction in input costs is seen as an opportunity for making Indian products more competitive and hence expanding consumer demand.
The full benefits of the ASEAN India Free Trade Agreement on “Goods”, which came into effect in August 2011, are yet to be seen. This is evident from trade between India and ASEAN which has stagnated under US$ 80 billion, for the last two years, though we are targeting US$ 100 billion by 2015. Seeing this potential, on side-lines of 10th ASEAN Summit at New Delhi, in December 2012, the Trade and Commerce Ministers of India and ASEAN announced early conclusion of a comprehensive India-ASEAN FTA, covering not only goods but also investments and services. This new FTA is likely to be signed by end of this year, as announced by the Prime Minister of India recently at the 11th ASEAN-India Summit in Brunei.
The present survey brings out expectations of members of corporate India and drew responses from Indian Companies having Business engagement with ASEAN. The survey was targeted at Companies from different sectors which have already invested or are doing business with ASEAN Countries.
Respondents to this online Survey covered sectors such as Pharmaceuticals, Automotive, Manufacturing, Plastics, Chemicals, Consulting Services, Infrastructure & Construction, Healthcare, Agriculture Products, Mining & Minerals and services.
The survey notes that the general feeling amongst the Indian Industry is that doing business with ASEAN is ‘easy’. This relates to the fact that Singapore, Malaysia & Thailand, which have 60-65% share of our trade with ASEAN and also hold majority in terms of investments, are amongst the top countries in terms of Global Ease of Doing Business Ratings.
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