Indian Economy - News & Updates - Archive

[Neo]

Inflation at 12.01% for first time in 13 years​

The wholesale price index based annual rate of inflation rose to 12.01 per cent, prompting the Finance Ministry to say that inflation, on a week-on-week basis, has continued to remain stable.

The WPI moved up from 239.3 in the week ending July 19, 2008, when it stood at 11.98 per cent, to 239.6 in the week ending July 26, 2008.

In the ‘primary articles’ group, the annual point-to-point inflation increased to 10.32 per cent, as compared to 10.24 per cent reported last week, but lower than 10.84 per cent reported for the week ending June 28, 2008. The Finance Ministry said inflation at its current level was lower than its level of 10.47 per cent, a year back.

Out of a total of 98 articles, 18 articles have shown a decline in prices as compared to July 19, 2008. These included among others, arhar, gram, barley, wheat, rice, Bajra, urad, fresh coconut, cardamoms, groundnut seed and iron ore. Another 53 articles have shown no increase in prices.

Prices of 18 articles (out of a total of 19) in commodity group ‘fuel and power’ have not shown any increase.

In the case of ‘manufactured products’, out of a total 318 commodities, a large number, 299 in all, have shown no increase in prices over the last week. In the case of 4 commodities there is a decline in prices. These commodities include cottonseed oil, groundnut oil, resins and acids of all kinds.

Only 15 products, particularly the cotton and woolen yarn, woolen cloth, groundnut cake, white printing paper, ball bearings, caustic soda, cement, newsprint and sugar witnessed an increase in prices.

The annual inflation rate for the group of 30 essential commodities at 6.66 per cent was marginally lower than the inflation of 6.67 per cent recorded in previous week.

Annual inflation of these commodities has continued to be range bound between 5.7 to 6.7 per cent in 17 weeks of the current fiscal year.

Increase in prices of essential commodities which include food grains, pulses, edible oils, vegetables, dairy products and some other commodities including kerosene, soap and safety matches have more or less stabilised.”

<b>Inflation at 12.01% for first time in 13 years</b>

 

[Neo]

Mumbaikars spend least on education ​

Sunil Jain / New Delhi August 9, 2008

Spend 2.8% of income versus 6.7% for Delhi.

Due to the vastly different size of population (79 million in megacities versus 20 million in boom towns and 8 million in niche cities), the average size of various markets differs widely.

So, while Mumbaikars spend a smaller proportion of their incomes on food, beverages and tobacco (33.2 per cent) than Surat-ites (37.5 per cent), the total market for food, beverages and tobacco products in Mumbai in 2007-08 was Rs 28,590 crore as compared to a much smaller Rs 6,600 crore in Surat.

In education and recreation, similarly, Mumbaikars spent just 2.8 per cent of household expenditure versus 5.4 per cent in Surat — the size of this market, however, was Rs 2,420 crore in Mumbai in 2007-08 versus Rs 940 crore in Surat. Delhi had the largest market in this segment at Rs 4,480 crore.

On an average, niche city households spend around a fourth more than their megacity counterparts on housing, 18 per cent more on education, 23 per cent more on health and 27 per cent more on social spending.

WHAT DRIVES CONSUMPTION



As a result, 40 per cent of households in niche cities own a washing machine as compared to 33 per cent in megacities and 22 per cent in boom towns.

More than a quarter of niche city households own a car, marginally higher than that in megacities and much higher than the 15 per cent in boom towns.

Interestingly, niche cities fare the worse when it comes to the usage of financial products like credit cards (under five per cent of the population in towns like Amritsar, Ludhiana and Jalandhar have credit cards) and insurance policies (35 per cent for niche cities versus 47 per cent in boom towns).

As in all such cases, what drives consumption is a combination of rising income levels (reported yesterday) and changing consumption patterns across income groups as well as across cities for the same income groups.

While just 4.3 per cent of those with an annual household income of under $3,000 (Rs 1,20,000) own a car in the top 20 cities, this almost doubles as households reach the next group of aspirants (with maximum incomes doubling to Rs 2,40,000) and then again by almost seven times to 55 per cent in the case of the middle classes (where incomes range between Rs 2,40,000 and Rs 12,00,000).

In the case of mobile phones, around 16 per cent of low-income households own such modes of communication and this jumps to 53 per cent in the case of aspirant households and then to 77 per cent in the case of middle-class households. In the case of high-income households (who earn more than Rs 12,00,000 per year), this rises to nearly 90 per cent.

The combination of increasing income levels (more than half the population in niche cities is middle class as compared to 29 per cent in boom towns) and changing consumption patterns mean that the drivers of consumption are quite different across the cities.

Thus, over 70 per cent of car ownership in megacities like Delhi and Mumbai emanates from middle class households, it is just around 50 per cent in the case of the boom towns and almost as high as 80 per cent in niche cities.

In the case of mobile phones, while both aspirant and middle class households account for roughly the same proportion (45 per cent each) of ownership in megacities, the figure is 52 per cent and 33 per cent, respectively, in the case of boom towns.

In the case of air-conditioners, aspirants account for around seven per cent of ownership in megacities while this rises to nearly 30 per cent in the case of boom towns. In DVD players, similarly, the market is evenly divided among aspirant and middle class households (45 per cent each) in megacities; in the case of boom towns, however, aspirants account for around half the market while middle class households account for just around a fourth.

These are the findings of The Next Urban Frontier: Twenty Cities to Watch, an NCAER-Future Capital Research (of the Future Group) jointly written by Rajesh Shukla and Roopa Purushothaman.

Eight megacities like Delhi/Mumbai/Kolkata are the largest cities in terms of population and consumer markets, seven boom towns like Surat/Kanpur/Coimbatore represent the next set of large population cities with high expenditure levels; and five niche towns like Faridabad/Ludhiana/Jalandhar have smaller population but spend much more than cities of comparative size.

Mumbaikars spend least on education

 

[Neo]

India least popular among expats for a long haul: Survey ​

Press Trust Of India / New Delhi August 8, 2008

It offers the cheapest accommodation, the highest savings and a luxurious life across the world, but India is still the least desired place when it comes to attracting the expatriates for a longer stay, a new survey reveals.

According to a survey of expatriates across four continents, conducted by global banking major HSBC, Singapore, the US and the UAE have emerged as the three most popular destinations among expats.

The overall ranking, where India has been placed at ninth position, is based on four criteria — longevity of stay, earning and saving, luxury and accommodation.

In individual categories, India has been ranked as the country with the cheapest accommodation, while it comes on the top in terms of earnings and savings for the expats.

In terms of living a luxurious life also, India has been ranked as the third best after the UAE and Singapore.

However, when it comes to longevity, which measures the score of a country in terms of attracting expats and where expats settle down, India has been ranked at the bottom of the list.

The three countries scoring highest in terms of longevity are the Netherlands, Germany and the US.

Europe has emerged as the most popular destination in terms of the length of time expats stay there. More than three quarters (82 per cent) of expats now living in the Netherlands have been there for three or more years, followed by Germany (77 per cent) and Spain (76 per cent).

India least popular among expats for a long haul: Survey

 

[Neo]

India cotton output seen at 24m bales ​

Sunday, August 10, 2008

WASHINGTON: India cotton output during 2008/09 is forecast at 24 million (480 lb) bales, a decline of 1 million bales from the prior year, due to a decline in area planted, a US Agriculture Department attache in New Delhi said in a report released on Friday.

In the report dated Aug 5, the attache said area planted was estimated at 9.1 million hectares (22.5 million acres), down from 9.55 million hectares (23.6 million acres) in 2007/08.

The attache also revised 2008/09 exports lower to 6.3 million bales compared with a record 7.2 million bales a year ago. Imports were increased to 800,000 bales from 390,000 bales due to “relatively tight domestic supplies and removal of the import duty”. The crop year for India cotton begins in August.

Separately, another attache said Pakistan cotton production during 2008/09 was estimated at 9.375 million bales on 2.8 million hectares (6.9 million acres).

India cotton output seen at 24m bales

 

[Flintlock]

We are transforming rural India: PM
Aug 14th, 2008 | By Sindh Today | Category: India

New Delhi, Aug 15 (IANS) Prime Minister Manmohan Singh Friday said his government was committed to ‘transforming rural India’ and the results have already begun showing with a turnaround of the agricultural economy for the first time.

Addressing the nation from the ramparts of the Red Fort as India celebrated the 61st anniversary of its independence from British rule, Manmohan Singh said he had delivered his first Independence Day address from the same platform four years ago with the commitment to give a ‘new deal to rural India.’

And this was being achieved, he said.

‘Our effort at increasing investment in rural areas and reducing the debt burden of farmers has turned our agricultural economy around. After almost a decade of stagnation especially from 1998 to 2004, investment in agriculture is increasing and there has been a revival in this area.

‘We have had record production of foodgrains, cotton and sugar in 2007-08,’ the prime minister said amid cheers from the thousands of people assembled on the rain-washed greens in front of the Red Fort in the old city.

‘Our farms are once again green. Our godowns are once again filling up. Our farmers are once again hopeful about their future and their welfare.’

The prime minister said that through the Rashtriya Krishi Vikas Yojana (National Agricultural Development Plan), the government was investing Rs.25,000 crore (Rs250,000 million/$6 billion) in agriculture.

He said that to provide relief to debt-distressed farmers, banks loans to the tune of about Rs.71000 crore (Rs.710,000 million/$8 billion) had been waived.

In the past four years, he said, the government had increased bank credit for agricultural sector from Rs.81,000 crore to Rs.225,000 crore and reduced the interest rates for farm loans.

And in order to improve the economic conditions of farmers the government had increased the procurement prices for food grains - 50 percent for wheat and 30 percent for paddy. The National Food Security Mission had been set up to enhance production of rice, wheat and pulses.

Irrigation, watershed development, rain fed areas development, and flood management had received special attention.

The National Rural Health Mission had been expanding public health facilities and services in rural areas.

He described the National Rural Employment Guarantee Programme as a ‘historic initiative’ that is providing minimum livelihood support to the millions of needy rural poor and was ‘aimed to soften the sharp edges of poverty’.

Saying that he had spent the first 10 years of his life in a village that had no electricity, no drinking water supply, no doctor, no roads and no phones, he said though after independence there had been considerable development in rural areas, ‘yet many of our citizens still live a life that I lived in my childhood’.

That is why when our government took over, we launched Bharat Nirman - a project to build rural infrastructure.

‘Our government is committed to transforming rural India. In these four years we have taken important initiatives. I am confident that a new and prosperous India will be built due to our efforts,’ he declared.

 

[Flintlock]

India Inc's investment plans surge to Rs 10 trillion: Assocham
17 Aug, 2008, 1236 hrs IST, PTI
NEW DELHI: India Inc seems unperturbed by signs of global recession, with their capacity expansion plans surging past Rs 10 trillion in the first six months of this year nearly double the figure for the previous five months, a study said.
Indian companies have announced capacity expansion investment worth Rs 10,50,950 crore in the first six months of 2008, against Rs 5,67,851 crore between July-December 2007, industry body Assocham said in a report on state-wise investments.
Out of the total 24 states tracked by the Chamber Research Bureau Andhra Pradesh, Maharashtra, Orissa, Rajasthan and West Bengal were the most preferred destination by the private players for making investments in the first half of 2008.
Maharashtra topped the chart with investment commitments worth Rs 1,20,065 crore in sectors like power, real estate, automobiles, ports and shipping, Assocham President Sajjan Jindal said.
The biggest of the announcements were made by Tata Power at Rs 25,000 crore, planning to raise power generation capacity to 12,861 MW for the next five years, Reliance Industries for setting up semi conductor plant and other micro -technology units, at an expenditure of Rs 21,666 crore for the next 10 years.

India Inc's investment plans surge to Rs 10 trillion: Assocham - Indicators-Economy-News-The Economic Times

 

[Flintlock]

'India Inc way ahead of Western companies'

16 Aug, 2008, 1800 hrs IST,Deepshikha Monga, ET Bureau
NEW DELHI: Indian companies can teach the world, particularly the US, a lesson or two on workforce training and development. The former disciple that learned best corporate practices from the West has now become the guru, says a latest study.

The study, titled ‘How the disciple became the guru’ , was released by Kauffman Foundation and conducted by Duke University’s global engineering & entrepreneurship project team. It is based on interactions with leading Indian companies across sectors such as IT, BPO, banking and pharmaceuticals.

“We were absolutely astonished by India’s capabilities in R&D that were as good as the West, despite a messed-up education system. It’s not the universities which are training these R&D specialists but the surrogate education system created by Indian companies,” the study’s lead author and Duke University’s Pratt School of Engineering executive-in-residence Vivek Wadhwa said.

The study notes innovative practices developed by Indian companies to tap the talent pool from an early stage. Companies are going to colleges much before they hire to help students become industry-ready.

For instance, 20 of Satyam’s 80 senior executives serve as mentors on campuses, and employees are encouraged to serve as guest lecturers. Infosys is piloting an initiative to hire and train final-year engineering students to do 3-4 month project. Genpact is hiring undergraduates to work for it three days a week for a salary in addition to paying half their tuition fees.

For recruitment, Indian companies are using retail kiosks and stores. While Genpact has about 22 such stores from where it hires 25% of its staff, ICICI Bank has recruitment kiosks inside its retail branches where candidates can submit resumes and appear for interviews.

The study notes that leading Indian firms recruit for general ability and attitude rather than specialised domain and technical skills. They rely on their own training and development efforts to impart the skills required. For instance, all IT-BPO companies hire non-engineering graduates . HCL Technologies’ goal is to have half its recruits from arts and science colleges.

“Indian companies are doing way beyond the West. They are investing in their employees to make them more competent . American companies, who are worried about job loss and immigration loopholes , need to realise that you can only compete by making your workforce competitive ,” Prof Wadhwa said. Attrition remains the biggest challenge for Indian companies, but the study notes that their attrition rates are still lower than most American companies. “Indian firms have been able to keep attrition rates constant or reduce them,” Prof Wadhwa added.

'India Inc way ahead of Western companies'- Corporate Trends-News By Company-News-The Economic Times

 

[Flintlock]

Every quarter the Centre for Monitoring Indian Economy (CMIE) tracks all investment projects presently under implementation. This is a useful resource for measuring inter-state variation in investment. Investment is the foundation of future income growth, so this data shows a sense of how different states will fare in the future. In addition, changes in the performance of states in this regard measure the success or failure of the political leadership in creating a business environment that is supportive of investment.

Measured in nominal rupees, the per capita investment under implementation in India rose from Rs.8,450 in December 1997 to Rs.22,669 in December 2007. This reflected a rise of 112% over the last five years and 168% over the last 10 years.

And Bihar still does not get it

 

[Flintlock]

Chhattisgarh to get Rs.1.7 trillion investment in power

Fri, Aug 15 02:43 PM

Raipur, Aug 15 (IANS) Energy companies will invest Rs.1.7 trillion ($42.5 billion) in Chhattisgarh to set up coal-fired power plants having a total power generation capacity of 42,000 MW, Chief Minister Raman Singh said Friday.

'In a bid to become the power hub of the country, the state has signed separate agreements with a total of 51 companies that will pump in Rs.1.7 trillion to generate 42,000 MW electricity,' Raman Singh said during his Independence Day speech at the Police Parade Ground here.

The highlights of the Independence Day function was a dashing cultural programme by students attired in colourful dresses and a show by sniffer dogs deployed in insurgency-hit areas to detect land mines.

He said the state had made all round progress in recent years, evident from the rising number of engineering and poly-technique colleges as well as expanding road networking even in the interiors.

'The number of engineering colleges has gone up to 31 from 14 four years back and poly-technique colleges to 13 from 10. They now have a combined enrolment strength of 10,000 engineering students,' Singh said in his 20-minute speech.

'In just the past one year, 7,361 km of roads have been constructed in addition to 300 km of road under projects funded by the Asian Development Bank (ADB),' the chief minister said.

Chhattisgarh to get Rs.1.7 trillion investment in power - Yahoo! India News

 

[nitesh]

guys check this:

Another telecom revolution in sight

Welcome

 

[nitesh]

FDI in Q1 FY 09 exceeds total inflows in 2005-06- Indicators-Economy-News-The Economic Times
MUMBAI: India is fast catching up with China in the flow of Foreign Direct Investment as it crossed 10 billion dollars in the first quarter of this fiscal.

Foreign Direct Investment (FDI) in the first quarter of FY 09 has far exceeded the total FDIs flows received by the domestic economy in the financial year 2005-06, Reserve Bank data said.

The total FDI inflows into the country in the April-June period amounted to USD 10.073 billion, nearly one billion more than the total FDI inflows--USD 8.961 billion, reached in the 2005-06 period, RBI said in its August report.

The FDI flow into India was less than 10 billion dollars annually until 2005-06. It shot up to 22 billion dollars in 2006-07 and 32 billion dollars in 2007-08. China averaged 50 billion dollars annually in the past decade.

If the first quarter trend continued, India could cross this fiscal 40 billion dollar mark in FDI annual inflow for the first time.

FDI flows, during April-June, almost doubled when compared to the same quarter of FY 08, USD five billion. Of the total FDIs reached here in the April-June period this fiscal, around USD 2.253 billion was on account of the acquisition of shares of Indian companies by foreign entities, RBI said.

While the momentum in the foreign direct investment is expected to continue in the remaing part of FY 09 on the back of a strong domestic demand, the pace of the growth may be a little lower compared to the preceeding months, RBI said.

"The private corporate investment in 2008-09 is likely to increase, although it may grow at a slower pace... Corporate's incentives to invest are likely to remain strong in 2008-2009, namely high domestic demand and high capacity utilisation rates amidst improved profitability of last few years," RBI said.

The country received a record USD 11.9 billion FDI in the final quarter of last financial year and has continued the momentum despite the choppy market conditions in some of the major economies in the first quarter on the back of a strong domestic demand for various projects.

According to the Reserve Bank's estimates, total Foreign Direct Investment in the first six months of the current calender year aggregated to USD 21.948 billion, close to a USD 22.079 mark routed to domestic market by Foreign direct investors in 2006-07.

Meanwhile, FIIs sold a total of USD 5.177 billion in the April-June period, much above as compared to a USD 4.1 billion in Q4 FY 09, RBI said.

Total FII inflows in FY 08 stood at USD 20.328 billion while other investors including offshore funds put in USD 298 million during the period. However, in the current fiscal, except in January, FIIs sold nearly USD 15.811 billion, so far, RBI data showed.

In January, the country received an FII inflow of 6.49 billion.
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finally some good news, hope these inflows will help in Current Account. We should target for 80 billion FDI by 2010 or 2011.

some more good news

Foreign capital inflow hits $22 bn in first six months
Foreign capital inflow hits $22 bn by half time- Finance-Economy-News-The Economic Times
MUMBAI: Foreign investment in the country&#8217;s industrial and other firms has surged to nearly $22 billion during the first six months of the year, with the momentum of flows continuing in the first quarter of 2008-09.

After record flows of $11 billion during the last quarter of 2007-08, foreign direct investment (FDI) during April-June 2008 has topped $10 billion &#8212; providing comfort to fiscal and policy managers considering that foreign portfolio investors have been major sellers since the beginning of the year. They have sold stocks worth $6.5 billion this year.

What is most encouraging this time is that a bulk of the inflows have been channelised into greenfield projects. Indications are the FDI flows would be enhanced with an estimated investment of $5 billion by Dai-chi Sankyo in Delhi-based pharma company, Ranbaxy. Our policy makers have placed FDI on top of their preferred hierarchy of capital flows considering the benefits it provides in the form of job generation and technology transfer.

According to the latest RBI data, at $10.1 billion, FDI inflows during April-June were double the amount of what the country received a year ago. However, according to the Prime Minister&#8217;s Economic Advisory Council, &#8220;it is possible this doubling in April-May is due to bunching of transactions and is unlikely to be sustained through the year&#8221;.

FDI inflows have been on the rise in the past three years. In 2007-08, inflows touched $32 billion. However, a sizeable portion is reinvested earnings by companies, i.e., money invested in acquisition of existing shares or private equity inflows. However, the FDI figures for the latest quarter don&#8217;t include reinvested earnings. Also, of the $10.1-billion FDI, only $2.3 billion is towards share acquisition. Even private equity flows, also included in the FDI numbers, are believed to have slowed significantly in the wake of the turmoil in the global credit market.

However, what could be adding to the discomfort of policy makers is the sectors that the money is flowing into. Nearly 15&#37; of the FDI inflows during April-May, for which the data is available, has gone to the real estate and housing sector. Services and infrastructure are the other sectors witness to huge inflows.

The FDI figures seem to indicate that the country&#8217;s long-term growth story is strong. In fact, in its report released earlier during the week, credit rating firm Standard and Poor&#8217;s has forecast that although the country&#8217;s growth projections have been lowered over the initial forecast twice this year, it would still be the second-fastest growing economy in Asia-Pacific after China.

Rating agencies have been expressing concern about the country&#8217;s external finances in addition to their concerns about inflation and fiscal deterioration. However, rising FDI flows appear to have bolstered the balance of payments &#8212; a balance-sheet of the country&#8217;s financial transactions with the outside world &#8212; especially against the backdrop of an outflow of $5 billion of portfolio investments during the period.

Notably, while FDI is seen as stable foreign money, portfolio investment is volatile and considered hot money that may be drawn down swiftly during a financial or an economic crisis.

The report on the outlook for the economy in 2008-09 released by the Prime Minister&#8217;s Economic Advisory Council released earlier this week is bullish on FDI inflows, though it has scaled down the country&#8217;s growth projections. For the year as a whole, it has taken a 43% increase in in-bound FDI to $46.2 billion (including private equity).
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[jaison]

i think india has lot of potential compared to china....even if we cant beat them in economy may be we can beat them technologically as we have a large talent pool and the avg age of indians is 29 which far lower than chinas....but we should have a more holistic approach to education,r&d........and we also have better access to western technology than china

 

[Energon]

i think india has lot of potential compared to china....even if we cant beat them in economy may be we can beat them technologically as we have a large talent pool and the avg age of indians is 29 which far lower than chinas....but we should have a more holistic approach to education,r&d........and we also have better access to western technology than china

Currently China is way, way ahead when it comes to technology specific R&D and production compared to India. In fact it is unlikely that India will able to "catch up" with their Chinese counterparts anytime soon (in our lifetime).

 

[lovemess17]

Currently China is way, way ahead when it comes to technology specific R&D and production compared to India. In fact it is unlikely that India will able to "catch up" with their Chinese counterparts anytime soon (in our lifetime).

i dont know how u feel but i am confident and calling chinas technology specific R&D and production are far ahead is just baseless
work hard help people come up and i will try to do the same if does not work even after a long time (within our lifetime)then i will agree with your words.

 

[Flintlock]

ASEAN concludes free trade deal with India: ministers

5 hours ago

SINGAPORE (AFP) — Southeast Asian nations have concluded a deal for free trade in goods with India, ministers said Thursday, in a development hailed as a key regional milestone after hard negotiations.

The agreement between the Association of Southeast Asian Nations (ASEAN) and India, its seventh-largest trading partner, covers billions of dollars in trade and a market of 1.7 billion people.

Singapore's Minister for Trade and Industry Lim Hng Kiang and India's Minister for Commerce and Industry Kamal Nath announced the deal during an ASEAN meeting in the city-state.

Nath expressed India's "deep satisfaction" at the conclusion of the pact, which followed six years of talks.

"This is an important milestone for our region," he said.

ASEAN and India have set a target for total trade to reach 50 billion US dollars by 2010 from 38 billion dollars currently, Nath added.

The Southeast Asian bloc of about 550 million people is forging free trade pacts with key regional economies, including China and India, to ensure it does not become economically sidelined.

ASEAN itself aims to achieve a single market and manufacturing base by 2015.

Senior officials agreed on the ASEAN-India pact earlier this month during a meeting in Brunei, but it was only sealed this week at the Singapore meetings.

The deal is to be signed at ASEAN's Bangkok summit in December. It covers contentious products like crude and refined palm oil, coffee, pepper and tea, but also excludes 489 items from tariff cuts.

Lim said the excluded items represent five percent of annual trade value and are "not a very significant number."

The agreement was supposed to have been concluded last year, but talks became bogged down by differences over products that India wanted excluded from tariff cuts.

New Delhi had submitted a list of 1,414 products, while ASEAN's target number was 400.

India adopted a free-market economy in the early 1990s and was keen to expand trade ties with ASEAN, but it also wanted to protect sensitive sectors such as agriculture and textiles, which provide livelihoods for millions.

"It took a long time understanding the sensitivities of all the countries within the ASEAN and for the ASEAN countries to understand India's sensitivities," Nath said.

He added that India had already reduced tariffs unilaterally.

Its rate on crude palm oil has been cut to zero from 50 to 60 percent five years ago, while India's peak tariff rates now average 9.7 percent compared with 20 to 25 percent five years ago, he said.

Lim, the Singapore trade minister, said it was not easy for India to deal with ASEAN's 10 diverse states, but "respecting our sensitivities and exercising flexibility" sealed the deal.

Nath said India's trade with ASEAN is 9.6 percent of his country's global trade, while trade with India is only two percent of ASEAN's global trade.

"So the potential for enhanced economic engagement between ASEAN and India is profound," he said.

Indonesian Trade Minister Mari Pangestu said the agreement "will pave the way for greater and closer economic partnership and cooperation in the future" between ASEAN and India.

Ministers also agreed to start new negotiations to expand the trade pact to include services and investments. Those talks are to be completed by the end of 2009.

ASEAN, Australia and New Zealand also announced Thursday that they had concluded talks on comprehensive free trade deals.

The Southeast Asian bloc has now completed trade ties with all its key Asia-Pacific trading partners following the latest pacts.

ASEAN sought to strengthen regional trade links after the so-called Doha Round of global trade talks broke down in July because of a dispute between India and the United States over agricultural tariffs.

AFP: ASEAN concludes free trade deal with India: ministers