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Arnab Sen asked: What is the status of India-Indonesia trade and the negotiations on FTA?

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  • Rahul Mishra replies: After Singapore, Indonesia is India’s biggest trading partner in the ASEAN bloc and the bilateral trade between the two countries has been growing at a fast pace. According to the sources, bilateral trade was US$ 20.136 billion in 2011-12, US$ 14.128 billion in 2010 and US$ 13 billion in 2009-10. The two countries are now hoping to increase their bilateral trade up to $45 billion by 2015. In this regard, the India Business Forum was launched on 19 July 2012 to boost trade and investment between India and Indonesia.

    In November 2005, a Memorandum of Understanding (MoU) was signed to set up a Joint Study Group to examine the feasibility of a Comprehensive Economic Cooperation Agreement (CECA). The Joint Study Group, comprising government officials and economists from India and Indonesia, subsequently submitted its report on the Feasibility of India-Indonesia CECA on 15 September 2009. Commencement of negotiations on India-Indonesia CECA was announced on 25 January 2011 during the visit of the Indonesian President to India. To strengthen trade links, a MoU on convening of a Biennial Trade Ministers’ Meeting was also agreed upon. At the official level, the negotiation process has been completed and it’s only a matter of time when the CECA gets signed.

    At the regional level, India-ASEAN FTA on goods is operational, which is now supplemented with the recently signed FTA on services. At the bilateral level, India has already implemented CECAs with Singapore and Malaysia. Apart from Indonesia, India is working on a similar agreement with Thailand also. The bilateral CECAs and the FTA with the ASEAN would help India and the ASEAN countries to work on the possibilities of a Regional Comprehensive Economic Partnership (RCEP). The ASEAN plans to set up RCEP with its six key trading partners, including China, Japan, South Korea and India.