The pact throws up myriad trade opportunities for both sides and gives a boost to India's Look East Policy and the prospects for its economic integration with South-East Asia.
India and Malaysia today signed a comprehensive market opening pact that throws up myriad trade opportunities for both sides and gives a boost to India's Look East Policy and the prospects for its economic integration with South-East Asia.
The Comprehensive Economic Cooperation Agreement (CECA) was signed by commerce minister Anand Sharma and his Malaysian counterpart Mustapa Mohamed in the presence of Prime Minister Najib Razak and several leading captains of industry from both sides.
"The CECA will usher in a new era of much deeper economic cooperation," a beaming Premier Najib said, adding that his Indian counterpart, Manmohan Singh, was very supportive of this and a very good friend of Malaysia.
The agreement, which was reached after seven rounds of negotiation, will see Indian mangoes, cotton, motorcycles, trucks and basmati rice attract less duty in Malaysia, among other things.
As a quid pro quo, the South-East nation will face less barriers on the sale of its fruit, engineering goods and chemicals in India.
Sharma, who inked a trade pact with Japan on Wednesday, said the CECA would boost India-Malaysia trade to $15 billion by 2015, "which we can hopefully achieve much earlier".
An India-ASEAN FTA is already in place, but Sharma said the biggest benefit of the CECA was the doors being thrown open for a wide range of services. These include professional services, telecommunications, research and development, transport, retail and environmental services.
The pact includes provisions for freer movement of skilled professionals for IT, accounting, architecture and banking.
The CECA will also allow increased cross-flows of investment in the services sector through liberalisation of foreign equity limitations.
The CECA marks a new era in bilateral ties, with both ministers calling the agreement a vehicle that would serve to enhance trade and investment flows and encourage freer movement of goods, services and professionals between India
and Malaysia.
India was Malaysia's 13th largest trading partner in 2010, with exports from Malaysia to India amounting to $6.5 billion and imports at $2.4 billion.
Indian investments in Malaysia are valued at $15.9 million and are mostly in the fields of scientific and measuring equipment, fabricated metal products, furniture and fixtures.
The Consortium of Indian Industries in Malaysia (CIIM) said the CECA will open several business opportunities, especially in the Small and Medium Enterprises (SME) and services sector.
"While it is important to look at big companies and projects, the full engagement between the business communities in India and Malaysia will come with the engagement of the SME sector," CIIM President Umang Sharma told PTI.
He said his group believes that the SME sector is the engine of growth.
More than 25% of the workforce in India is employed by the SME sector and contributes more than 50 % to the GDP.
"There is a lot of SME engagement potential in the second tier cities in India in the high tech industry and services sector, both sectors which Malaysia is keen to develop," he added.
The CIIM plans to organise a conference for the Malaysian business community in April.
The Consortium of Indian Industries is a national level registered association of Indian origin companies which have investments in Malaysia and operate in Malaysia.
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