Opportunities for India-ASEAN Investment Cooperation

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2 Opportunities for India-ASEAN Investment Cooperation Dr. Raj Agrawal Director & Professor IILM, Graduate School of Management Greater Noida

3 OUTLINE Regional Integration: An Introduction A Sneak Peek At The Indo-ASEAN FTA Case for Indo-ASEAN Investment Cooperation Investment Opportunities - Country Specific - Sector Specific

4 Architecture

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8 A SNEAK-PEEK AT THE INDO-ASEAN FTA Reduces tariffs to zero in over 4,000 goods out of 5,000 that are traded. To be done in a phased manner over six years Partial reduction in import tariffs on highly sensitive farm goods. Tea, coffee 45%, pepper 50%, crude palm oil 37.5%, refined palm oil 45% Sensitive list of goods with partial duty cuts 606 items, (Agricultural 16, Textile 304, Machinery & auto 60, chemicals & plastic 226) Negative list with no duty cuts 489 items. (Agricultural 302, Textile 81, Machinery & auto 52, chemicals & plastic 32, Others 22) The FA hopes to establish the world s 2nd largest FTA by facilitating the creation of an open market for 1.7 billion people with a combined gross domestic product of $2.4 trillion

9 Potential Cost Savings from ASEAN Integration

10 CASE FOR INVESTMENT COOPERATION India s comparative cost advantages are in services : - Financial Services - Information Technology - Health care - Tourism - Entertainment. There is desirability and feasibility of a Free Trade and Investment Area ( FTIA), comprising AEAN and India. A Study by conducted by ASEAN Secretariat and Govt of India:- - Such a FTIA would be mutually beneficial, though initially incremental exports from ASEAN to India would be almost at 4:1 ratio to incremental exports from India to ASEAN - Deepened specialization in production based on comparative advantage - Infrastructure Investment

11 Countries Indonesia Malaysia Philippines Thailand Singapore Myanmar Important areas of Mutual Economic cooperation with India Food and Energy security, oil exploration, healthcare, Infrastructure development, ICT cooperation in IT related services and sourcing of Manpower Infrastructure development, ICT cooperation in IT related services and sourcing of manpower, healthcare, oil exploration education services Healthcare, ICT cooperation in IT related services and sourcing of manpower, education services ICT cooperation in IT related services and sourcing of manpower, gems and jewellery, food processing, heritage tourism ICT cooperation in IT related services and sourcing of manpower, financial services, logistics and infrastructure development, tourism, education services Food Security, technical assistance, development of infrastructure links, agricultural and natural resource monitoring, establish institutional linkages in financial sector Vietnam Cambodia and Laos Food Security, technical assistance, development of infrastructure links, ICT cooperation in IT related services and sourcing of manpower, healthcare, oil and mineral exploration, education services Food Security, technical assistance, development of infrastructure links, ICT cooperation in IT related services and sourcing of manpower, healthcare, oil and mineral exploration, education services Brunei Energy security, oil exploration

12 INDIA -Investment Opportunities for ASEAN Behavioural & soft skills across sectors IT & ITES Retail Infrastructure Banking & Financial services Telecom Manufacturing Hospitality Healthcare Tourism Entertainment Pharmaceuticals

13 Pharmaceuticals India is 4 th largest pharmaceuticals producer in the world with 7% share of global production in volume Over 150 Indian formulations have received United States FDA approval ASEAN Companies may shift their production base as 100% FDI is allowed Joint drug research and multi-centre clinical trials

14 IT and IT Enabled Services CAGR exceeding more than 50% over the last ten years IT enabled services: Key drivers of Growth and engine of outsourcing This segment poised to grow even further very rapidly, worldwide- India has potential to tap 38% of the world market

15 Financial Services Personal financial services (PFS) Insurance Value-added added services in corporate banking (e.g., structured finance). Investors can tap the high-growing growing PFS business (e.g., deposits, credit cards, mortgages) by opening bank branches, setting up a 100 per cent-owned subsidiary or joint venture and buying into a private bank (up to the 74 per cent limit

16 Infrastructure The immediate opportunity for investors is to bid for construction contracts for roads, and to participate in road development on a build- operate-transfer transfer (BOT) basis. Opportunities also exist to take advantage of the SEZ policy by (i) financing the development of SEZs, (ii) developing SEZs through a joint venture with Indian promoters, and (iii) setting up industries or services in these SEZs.

17 Entertainment TV broadcasting and infrastructure TV software Indian film industry India music industry The radio

18 Summary Many benefits from trade and investment integration Generally, increased competitiveness Major lessons are aimed at improving production efficiency Diverse products, improve logistics, and improve information technology India has some useful initiatives on a way forward Indo-ASEAN Investment and Services, Bilateral Agreements with ASEAN countries India has adopted effective reforms to improve investment climate: Regionally and unilaterally India

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