India and the 10-member ASEAN grouping on Thursday announced concluding a deal for a free trade agreement that will break duty barriers for goods in the 1.5 billion people strong market.
"The countries of East Asia are important drivers of growth with large consumption to drive global economies," Commerce and Trade Minister Kamal Nath said.
"It took six years for India to understand the sensitivities of ASEAN, and for the ASEAN to understand the sensitivities of India," Nath said at a joint press conference of India-ASEAN economic ministers.
The FTA in goods will be signed at the ASEAN-India summit in Bangkok in December.
Economic ministers of ASEAN countries welcomed the conclusion of the Trade in Goods (TIG) agreement which took six years to conclude.
Negotiations for trade in services and investment as a single undertaking will begin as soon as possible, a joint statement issued by the leaders after the consultations said.
"India is ready. The onus is on ASEAN to gather its team and start negotiations on services and investment," Singapore's Trade Minister Lin Hng Kiang said.
The talks on services and investment are scheduled to wind up by next year-end. Nath said Singapore will coordinate for the services aspect while Malaysia will take care of the investment part.
Indonesian Trade Minister Marie Pangestu said ASEAN and India had come to "a level of understanding never been experienced before."
She said the FTA in goods paved the way for more economic cooperation between the two sides. "This will lead to a greater integration between ASEAN and its dialogue partner," she added.
ASEAN Secretary General Surin Pitsuwan described the conclusion of ASEAN-India FTA in goods as an "important milestone." He said the move will give impetus to the stalled Doha round of WTO talks which ASEAN ministers say should be revisited.
Malaysia's Trade Minister Muhyiddin Yassin said the FTA will open up huge opportunities with reduced or no import duties beginning next year.
ASEAN and India will eliminate import duties on 71 per cent of products by December 31, 2012 and another 9 per cent by 2015. The deal will also include duties on products placed in the sensitive track covering about 8 to 10 per cent to be reduced to 5 per cent by 2015.
A limited number of products will be excluded from tariff concessions based on the domestic sensitivities of respective countries.
The TIG has provisions for a special track for tariff reduction for five products which are key to exports of some ASEAN members. These are for crude and refined palm oil, coffee, pepper and tea.
Crude and refined palm oil are key exports of Malaysia and Indonesia while coffee, pepper and tea are the major exports of Vietnam to India.
The TIG agreement provides for the Rules of Origin at 35 per cent value add plus Change in Tariff Sub-heading (CTSH).
The region with about 1.5 billion people had a combined GDP of $2,381 billion last year.
The trade between India and the ASEAN totalled $38 billion in 2007-08 and could hit the $50 billion mark by 2010.
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