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SEAN and India finally signed the long-awaited free trade agreement (FTA) Thursday in Bangkok, ending more than six years of intensive negotiations.

Signed at the 7th ASEAN Economic Ministers (AEM)-India meeting, held in conjunction with the 41st AEM meeting from August 13 to 16, the agreement is set to take effect starting Jan. 1, 2010.

"This is another ASEAN achievement, linking the group with India, a market of 1.2 billion people whose economy is comparable to that of China, Japan and South Korea, countries with whom ASEAN has signed free trade agreements," Porntiva Nakasai, chairwoman of the AEM-India meeting, said.

She expressed confidence the agreement would be an important mechanism for ASEAN member countries to strengthen and expand trade and investment with India amid the global economic downturn.

"Trade between ASEAN and India is expected to increase to US$60 billion after the agreement goes into effect next year," Nakasai said.

The signing in Bangkok marks ASEAN's fifth such agreement after the ASEAN-Japan FTA, the ASEAN-China FTA, the ASEAN-Korea FTA and the ASEAN-Australia and New Zealand FTA.

Under the agreement ASEAN and India will lift import tariffs on more than 80 percent of traded products between 2013 and 2016. Tariffs on sensitive goods will be reduced to 5 percent in 2016 and those on up to 489 very sensitive products will be maintained.

In 2008, trade between ASEAN and India was valued at about US$47 billion, with Indonesia ranking third behind Singapore and Malaysia.

Speaking on the sidelines of the meeting, Indonesian Minister of Trade Mari Elka Pangestu said the agreement was very important for ASEAN considering India imposed relatively high tariffs on imported goods. "On average tariffs are more than 30 percent, and some commodities even have tariffs of up to 90 percent," she said.

The minister said the signing of the free trade agreement would certainly benefit Indonesia, especially with India's commitment to reduce the tariffs on CPO (crude palm oil) and RPO (refined palm oil), Indonesia's main non-oil and gas exports to India. Indonesia's second main export to India, coal, will enjoy 0 percent tax starting January 1, 2013.

For defensive purposes, she said, Indonesia only gave a commitment to open its market to Indian commodities for up to 42.5 percent of its total traded goods by 2013. The tariffs of commodities deemed sensitive will be reduced to 5 percent by 2019.

This, the minister said, means there would still be enough time for anticipatory measures to improve the country's competitiveness within the region.

Marie also held bilateral talks with Indian Minister of Trade and Industry Anand Sharma Thursday to review trade between the two countries.

"There has been significant economic engagement between India and Indonesia. We exceeded $10 billion and will take it even higher in the future," Sharma said after the meeting.

Marie said this value had been quite an increase, especially considering the previous official prediction was that the trade value would be US$10 billion in 2010.