“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,” said the survey.
The remaining 35 percent felt 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.
India and the 10-member Association of Southeast Asian Nations or ASEAN operationalised this FTA in goods in 2010.
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 USD 80 billion, for the last two years, though we are targeting USD 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 release said.
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, it asid.
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 percent 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.
Respondents are doing business mainly with Singapore, Malaysia, Thailand, Indonesia, Vietnam and Philippines. This is in line with current status of trade & investment with ASEAN, wherein over 95 percent of our trade and FDI is commanded by these 6 countries.
Among the respondents citing impediments in Initiating Business with ASEAN, most issues relate to labour norms, licensing processes, registrations, quotas, especially with countries like Indonesia, Philippines, Thailand and Malaysia.
40 percent of the respondents citing banking infrastructure related impediments, highlighted movement of funds to & fro India, as major bottleneck, specifically with CLMV (Cambodia, Laos, Myanmar and Vietnam) Countries.
30 percent of the respondents who highlighted regulatory environment as an issue, cited rules of origin norms as an impediment, while another 30 percent cited legal infrastructure / transparency in policies as a concern area.
These are specific to Indonesia, Philippines and Vietnam. Malaysia, Thailand and Singapore, though generally easy for business, make an appearance here w.r.t rules of origin. These issues were largely highlighted by Auto, Chemicals & Pharmaceuticals sectors.
Over 30 percent of the respondents experiencing problems during Sales &Distribution, find related aspects of connectivity, logistics costs and customs practices, as another concern area, survey added. – See more at: http://www.smetimes.in/smetimes/news/top-stories/2013/Nov/01/india-inc-not-thrilled-about-asean-goods-fta-ficci-survey630407.html#sthash.mCLRTpf9.dpuf