Malaysia has said its business community will enjoy better market access to India as more than 80 per cent of its products entering the country will be duty free by 2016 with the historic free trade agreement between India and the Asean.
India and the 10-member-group signed the landmark agreement on Thursday in Bangkok.
Malaysia International Trade and Industry Minister Mustapa Mohamed said 71 per cent Malaysian goods would enjoy duty-free access to India by 2013 and another 9 per cent by 2016, while tariffs for the remaining 10 per cent would come down to 5 per cent.
"The FTA between Asean and India will benefit Malaysia and the rest of the region. It took more than six years to complete the negotiations, much longer than any other FTAs signed by Asean," he said in Bangkok, national news agency Bernama said.
The agreement will come into effect on Jan 1, 2010.
Mustapa said as the agreement on trade covered products, both sides would start talks on services and investments that they hope to complete by the end of 2010.
Under the deal with India, Mustapa said, Malaysia would eliminate import duties on 6,792 tariff lines or products in the normal track (1) beginning Jan 1, 2010, and ending on December 31, 2013, as well as 1,266 tariff lines in the normal track (2) beginning Jan 1, 2010 and ending Dec 31, 2016.
The import duties on 1,336 tariff lines placed in the sensitive track by Malaysia will be reduced to 5 per cent by December 31, 2016.
India, which is Malaysia's 12th largest trading partner, will eliminate duties on 7,767 tariff lines or products in the normal track (1) by Dec 31, 2013 and 1,260 tariff lines in the normal track (2) by Dec 31, 2016.
Mustapa felt the FTA would boost trade between both countries, adding that Malaysian investors expanding their operations in India could also source their inputs from Malaysia and other Asean countries for their projects there.
Indian investors also invested $48.4 billion in Malaysia in 2008 while six projects worth $17.3 billion have been approved in the first six months of this year.
