India, Malaysia ink mega trade pact

PUTRAJAYA (MALAYSIA) - Malaysia and India concluded negotiations on Wednesday for a free trade deal that will take effect next year, setting the stage for annual bilateral trade to soar to $15 billion by 2015.

Trade and commerce ministers from both sides signed an agreement during a visit by Indian Prime Minister Manmohan Singh to Malaysia, confirming the end of talks that began in February 2008 and stipulating a time frame for the deal's implementation.

"I am confident that this agreement will transform our economic engagement in a very substantial way," Singh told a joint news conference with his Malaysian counterpart, Najib Razak, after the signing in Putrajaya, Malaysia's administrative capital.

The deal will complement a trade pact that came into effect in January between India and the 10-member Association of Southeast Asian Nations. However, it will be more extensive, covering services, investments, technical barriers to trade and other areas.

Both leaders agreed to sign the pact by January 31 and to implement it by July 1 next year. Trade between Malaysia and India totaled $6.5 billion between January and August this year after growing at an average of 14.9 per cent between 2004 and 2009.

The pact "will signify a huge strategic move in a very positive manner because it will unleash a tremendous potential in terms of creating investment and other business and economic linkages between the two countries," Najib said. The trade target of $15 billion could even be attained earlier than 2015, he said.

Malaysia exports electrical and electronic products, crude petroleum, palm oil and chemical goods to India, its 12th-largest trading partner and main export destination in South Asia. India, meanwhile, has invested $1.11 billion in nearly 100 manufacturing projects in Malaysia.

Under the trade pact, Malaysia is expected to receive better concessions for palm oil, cocoa, textiles and apparel, which were all excluded in the Southeast Asian regional pact. At Wednesday's meeting, both sides also agreed for greater engagement of Indian information technology companies in Malaysia and to boost cooperation in infrastructure and construction projects. -

(AP) -28 October 2010