CEBU CITY, Jan 11 (Bernama) -- Asean will not hesitate to stop negotiations on the Free Trade Agreement (FTA) with India if the issue of Exclusion List of goods is not resolved by July this year.

Minister of International Trade and Industry (MITI) Datuk Seri Rafidah Aziz said that Asean has received the commitment of India's Trade and Industry Minister, Kamal Nath, that India will review the list.

"In the meeting just now, for the first time, representatives at the ministerial level had decided on the direction of the negotiation after this," she told journalists after the Economic Ministers Asean-India Consultation here Thursday.

"If we remain at an impasse, then Malaysia (as the chairman) would not hesitate, with the consensus of Asean, to stop the negotiation as it cannot go on. This will only waste the time of the officers," she said.

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

To speed up the tariff liberalisation process under the Trade In Goods agreement, both parties had also negotiated on the modalities for the removal or reduction of tariff, especially products under the list of Normal Track, Sensitive Track and Exclusion List.

India has cut down the list of excluded goods from 1,400 to 490 goods now.

However, Rafidah said Asean should also review the list in order to safeguard the interest of its member nations.

"For example the list includes coffee exported by Vietnam and palm oil exported by Malaysia," she said.

Rafidah said both parties had also agreed to narrow the gap on the modalities adopted and shorten the Sensitive List to strike a quality TIG agreement.

An Asean-India FTA will cover at least 95 percent of trade between the regional body and India.

"Once a satisfying TIG agreement is reached, the negotiation on services and investment would start," she said.

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