Union Minister of Commerce & Industry, Anand Sharma and Mr. Mustapa Mohamed, Minister for International Trade & Industry, Malaysia, signed the India-Malaysia Comprehensive Economic Cooperation Agreement (CECA) in the presence of Malaysian Prime Minister, Mr. Mohd Najib Razak at Putrajaya in Kuala Lumpur on February 18, 2011.
The Agreement will come into effect on 1st July 2011 and the first review will be held within a year of coming into force
The India-Malaysia CECA is a comprehensive and ambitious agreement that envisages liberal trade in goods and services and a stable and competitive investment regime to promote foreign investment between the two countries.
The goods package under the CECA takes the tariff liberalization beyond the India-ASEAN FTA commitments on items of mutual interest for both the countries. Under the agreement, India will get market access in the Malaysian market for goods including fruits such as mangoes, banana and guava, basmati rice, two wheelers and cotton garments.
At the same time, protection continues to be provided for the sensitive sectors. Under the services agreement, India and Malaysia have provided commercially meaningful commitments in sectors and modes of interest to each other which should result in enhanced services trade. Sectors such as accounting and auditing, architecture, urban planning, engineering services, medical and dental, IT & ITES, Management Consulting Services etc. would get Malaysian market access.
Malaysia has offered comparatively higher level of FDI in key sectors of interest to India such as construction services (51%), computer and related services (100%), management and consultancy services (100%). This is a breakthrough in investments, given that Malaysia has a Bhoomiputra policy which mandates 30% equity participation by local companies.
Malaysia is the 3rd largest trading partner of India amongst the ASEAN (Association of South East Asian Nations) countries. India-Malaysia trade increased from US $ 3.52 billion to US $ 9.03 billion between 2005 and 2010 after reaching a peak of US $ 10.65 billion in 2008.
Mr. Sharma hoped that the bilateral trade target of US $ 15 billion by 2015 set during the visit of Indian Prime Minister to Malaysia in October 2010 should be achievable with the signing of the bilateral CECA.
A wide range of bilateral and regional matters including DMIC, the progress under the India-ASEAN Services & Investment Agreement negotiations and the Comprehensive Economic Partnership in East Asia (CEPEA) were discussed during this meeting.