India-Malaysia trade to reach $15 bn by 2015
India and Malaysia on Friday signed an economic partnership agreement that is expected to raise bilateral trade to $15 billion by 2015, just two days after New Delhi inked a similar pact with Tokyo, consolidating India's burgeoning economic ties with east and southeast Asia.
Indian Commerce and Industry Minister Anand Sharma signed the pact with Malaysia's Minister for International Trade and Industry Mustapa Mohamed in the administrative capital of Putrajaya, south of Kuala Lumpur, in the presence of Malaysian Prime Minister Najib Tun Razak.
The comprehensive economic cooperation agreement (CECA) will come into force July 1.
Friday's pact expands an economic agreement that came into effect in January last year between India and the Association of Southeast Asian Nations (ASEAN).
The India-Malaysia economic agreement had been in the works for long. It could not be sealed last year when Malaysian Prime Minister Najib Tun Razak visited India and later, his counterpart, Manmohan Singh, paid a return visit.
Malaysia is the third largest trading partner of India among the 10 members of the Association of Southeast Asian Nations (ASEAN).
India-Malaysia bilateral trade was worth $9.03 billion in 2010. It reached a peak of $10.65 billion in 2008.
Sharma said the new pact would help increase bilateral trade to over $15 billion by 2015.
"It is projected that in the next 15 to 20 years, of the five major economies of the world, three will be from Asia. Those three will be China, India and Japan. So we will have to work together," Sharma said at the signing ceremony.
Najib, who was also present at the ceremony, said: "I am very confident that when the agreement comes into force, the bilateral trade target that we have set at $15 billion by 2015 will be attained, if not earlier."
In a statement released by the Malaysian trade ministry, Mustapa said the Malaysia-India agreement is now more extensive -- covering services, investments and other areas that were excluded in the regional pact.
It will also give better tariff concessions, including Malaysia's palm oil exports, and advance the timetable for reduction or elimination of tariffs, he said.
Under the pact, the two countries will allow up to 100 percent foreign shareholding in more than 80 areas, including health care, telecommunications, retail, environmental services and other areas.
It will also make it easier for engineers, accountants, technology experts and other professionals from both countries to gain temporary entry for contract work, it said.
Service sectors like accounting and auditing, architecture, urban planning, engineering services, medical and dental, IT and IT-enabled services, and management consulting services will get access to the Malaysian market.
Sharma said the agreement will slash tariffs for 90 percent of Indian goods and 92 percent of Malaysian products.
India will get access in the Malaysian market for goods including fruits such as mangoes, banana and guava, basmati rice, two-wheelers and cotton garments.
Malaysia has offered comparatively higher level of foreign direct investment in key sectors of interest to India such as construction services (51 percent), computer and related services (100 percent) and management and consultancy services (100 percent).
With Asia emerging as a global economic power, Sharma said India was keen to deepen its economic ties in the region, especially with China.
He said a growing trade deficit with China was unhealthy but Chinese Premier Wen Jiabao during his visit to New Delhi in November promised to improve market access for Indian companies, especially in pharmaceutical and information technology sectors.
There were also talks to allow exports of some Indian agricultural products but he did not elaborate.
"We have been given assurances ... we have no reasons to doubt," he told reporters.
He brushed off talks of ongoing competition with China for regional influence, saying "the world is big enough to accommodate the rising aspirations of both China and India".