The India-Malaysia Free Trade Agreement (FTA) has been in place since 2010, with the aim of boosting trade and investment between the two countries. However, recent developments have caused some concern for businesses and investors on both sides.
In February 2019, Malaysia announced that it would be reviewing all its existing free trade agreements, including the FTA with India. This was seen as a potential blow to India, which has been struggling to increase its exports to Malaysia in recent years. In 2017-18, India`s exports to Malaysia stood at $6.4 billion, while its imports from Malaysia were worth around $10.8 billion.
The review of the FTA was expected to result in some changes, including the imposition of tariffs on certain products. This caused some anxiety among Indian businesses, especially those in the textile and pharmaceutical sectors, which account for a significant portion of India`s exports to Malaysia.
However, in late 2020, there was some good news for India when Malaysia officially notified it that it would not be terminating the FTA. The notification came after several rounds of negotiations between the two countries, with both sides agreeing to make some changes to the agreement.
Under the revised FTA, both India and Malaysia will be required to reduce or eliminate tariffs on certain goods. This is expected to benefit a number of industries, including textiles, leather, and pharmaceuticals. The new agreement also includes provisions for cooperation in areas such as e-commerce, intellectual property rights, and technical barriers to trade.
The notification of the revised FTA is expected to boost trade and investment between India and Malaysia, which have a long history of economic ties. Malaysia is one of India`s largest trading partners in the ASEAN region, and a significant destination for Indian investments. In recent years, there has been a growing interest among Indian companies in investing in sectors such as palm oil, infrastructure, and tourism in Malaysia.
Overall, the notification of the revised FTA is a positive development for both India and Malaysia. It is expected to create new opportunities for businesses and investors, and strengthen the economic cooperation between the two countries. However, there is still a need for both countries to address some of the challenges that have been affecting their trade relations, including non-tariff barriers and regulatory issues. With the right policies and strategies in place, India and Malaysia can build a more dynamic and sustainable economic partnership in the years ahead.