09/06/2008 (The Jakarta Post) - Representatives from Indonesia and India will meet in India in August to finalize a negotiation on an economic partnership agreement, an ambassador says.

Newly appointed Indonesian Ambassador to India Andi M. Ghalib said Saturday the agreement was a joint effort to achieve the target of $10 billion in bilateral trade by the end of 2009.

"We already have the blueprint on the partnership and hope to finalize all negotiations in August," Andi said on the sidelines of a seminar on the potencies and challenges of Indonesia's creative industry.

The economic partnership, Andi said, would include the lowering or removal of trade restrictions, in particular on taxes, most goods and services and investment.

However, an ongoing disagreement between the countries on market access has been widely cited as the cause for breakdowns in negotiations for a proposed ASEAN-India free trade agreement.

Indonesia is pressing for increased access for palm oil exports, while India seeks greater access for several sectors still considered sensitive.

India earlier agreed to reduce duties on refined palm oil from 90 percent to 60 percent and on crude palm oil from 80 percent to 50 percent by 2018.

However, Indonesia and Malaysia, together supplying about 70 percent of India's edible oil demand, pitched for an additional cut in tariffs to 40 percent for refined palm oil and 30 percent for crude palm oil.

Head of the Indian committee at the Indonesian Chamber of Commerce and Industry Djismun Kasri said the negotiation on the economic partnership was still concerned with identifying goods and services to be included in the agreement.

"There are many potential sectors that are still underdeveloped," he said, citing examples in the machinery, information technology and automotive sectors.

The negotiation, Djismun said, also focused on Indonesia's dependence on Singapore to transport its export shipments.

"Both parties agreed there should be direct shipping between India and Indonesia, not through a third party such as Singapore," he said.

According to Indonesia's Central Statistics Agency, bilateral trade value jumped to US$6.55 billion in 2007, leaping from $4.79 billion in 2006 on the back of strong demand for Indonesia's commodities.

Indonesia's exports to India reached $4.94 billion in value last year and its imports $1.6 billion.

Indonesia mainly exports palm oil, coal, copper, ore, alcohols, phenols, rubber, fruit and nuts to India and imports hydrocarbons, animal feed, flat rolled products, alloy steel, sugar molasses, cotton, aluminum and telecommunication equipment.

On the investment side, the first five months of this year saw more Indian companies interested in expanding their operations in the nation's steel, such as ArcelorMittal and Tata Group, which have taken some measures to buy stakes in state owned steel producer PT Krakatau Steel.