CEBU CITY, Jan 14 (Bernama) - When Malaysia held bilateral talks with India Sunday on the second day of the 12th Asean Summit, one could only guess what was discussed by both leaders in the closed and well guarded room.

But the best bet is that the Asean-India Free Trade Agreement (FTA) would have topped the agenda in discussions between Prime Minister Datuk Seri Abdullah Ahmad Badawi and his Indian counterpart Prime Minister Manmohan Singh.

Asean diplomats said India was trying to coax the 10-nation grouping to hasten snail-paced negotiations, no thanks to New Delhi's controversial negative list that could harm the export of Asean members.

The FTA was originally set to start on January 1, 2006, but a year later there is still no agreement on the terms and the point of contention are India's import duties of farm goods especially palm oil.

It discourages exports from both Malaysia and Indonesia.

Trade negotiations between both parties seemed to hit a wall after India presented a long negative list with some 1,414 odd items, and which have now been reduced to 490 items.

Even then, Asean does not seem to be impressed.

Analysts said there was a need to break the deadlock in negotiations at the highest level.

At the Asean Economic Ministers (AEM) meeting with India two days ago, Malaysia with the consensus of its members agreed that it would not hesitate to stop negotiations on the FTA if the issues are not resolved by July this year.

Malaysia had put on hold FTA talks with India for the first time in 2004 for six months.

Minister of International Trade and Industry Datuk Seri Rafidah Aziz said an Asean-India FTA will cover at least 95 percent of trade between the regional body and India.

It is hoped that leaders of Asean and India would come agree to discuss a list of items that are beneficial to trade for both sides and does not put some of the grouping's members at an disadvantage.

India was Asean's ninth largest trading partner in 2005.

-- BERNAMA