The free trade agreement of services and investment between India and the Association of South East Asian Nations (ASEAN) was finalized in commemorative summit in New Delhi.  This is a  much needed boost to our economy and marks the beginning of a trade relation between India and the South Asian Countries. The importance of service sector in the growth of India’s GDP needs no introduction. The service sector  is the largest contributor to the country’s economic growth. At present, the trade between India and ASEAN stands at $80 billion and the prediction of experts quote that with the 2012 FTA will boost trade to $100 million by 2015. India has attracted global eyes by rapidly modernizing its defense forces and has now emerged as the world’s biggest arms importer. The Indian Navy is the strongest in the entire Indian Ocean region, through which a majority of imports and exports of many of the ASEAN member countries pass. The  possible outcome of this important FTA are: 

1) Free flow of services between India and ASEAN will result in upgraded and quality services in the Indian service sector. 

2) Countries like Malayasia and Singapore can expand their trade relations with India which is a positive feature of development.

3) It can be seen as a boost of India’s chances into the membership of security council. 

4) Tourism Industry will flourish.  

5) The ASEAN’s total output is $20 trillion or nearly one-third of world’s economy and India is the fourth biggest and growing economy in this world and as such it will be beneficial to both the parties in terms of 

6) Improved relations between India and China which is tainted for border related issues.


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