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India, Malaysia sign trade pacts; agree to co-operate at WTO meet

Indian Prime Minister Atal Bihari Vajpayee signed a raft of bilateral economic agreements on Monday at the start of a three-day visit to Malaysia.

India and Malaysia agreed to co-operate at the next round of World Trade Organisation negotiations at Doha for protecting the interests of developing countries in the areas of labour, environment, investment and procurement.

The decision was taken following the talks between Prime Minister Atal Bihari Vajpayee and his Malaysian counterpart Mahathir Mohammad and the delegation level discussions between the two countries, Malaysian Foreign Minister Syed Hamid Albar told reporters.

Vajpayee, who arrived on Sunday with Information Technology Minister Pramod Mahajan and a 75-member business delegation, also held talks with Prime Minister Mahathir Mohamad.

The leader of the world's largest democracy, Vajpayee was earlier officially welcomed by Mahathir, Asia's longest-serving elected leader, at the new administrative capital of Putrajaya on the outskirts of Kuala Lumpur.

India and Malaysia signed one deal where New Delhi would accept palm oil as payment for carrying out a $1.5 billion railway project in Malaysia.

"The overall value of this project is expected to be over $1.5 billion, the largest ever to be awarded to an Indian company abroad," according to a summary of accords signed between the two countries.

Malaysia, the world's top palm oil producer, offered New Delhi a contract involving dual tracking and electrification of rail lines from northern Ipoh city to Padang Besar at the border with Thailand. This was in return for more palm oil purchases by India, the world's largest edible oil importer.

The two countries also signed a deal allowing Malaysian firms to invest, construct and manage sea ports in India, and another waiving visa requirements for their diplomats and government officials.

India, emerging as a global software power, will also be looking to take advantage of Malaysia's infrastructure facilities in its high-tech Multimedia Super Corridor, industry leaders said.

India seeks investment

"I think bilateral relations are at a stage of take-off. Economic reforms in India have opened up new avenues for investment," Indian High Commissioner to Malaysia Veena Sikri said ahead of the visit.

Analysts say India is keen to woo foreign investment, more of which has traditionally flowed to neighbouring China and other east Asian countries.

Malaysian Foreign Minister Syed Hamid Albar said India was firm on its commitment to consider a cut in palm oil import duties.

"I think the Indian government has given a positive answer that they'll look into the import duties, with the possibility of reducing the import duties based on whatever constraints they face," Syed Hamid told reporters after talks between the Indian and Malaysian delegations.

India ruled out a cut in palm oil duties just last Friday, dashing hopes of traders in Malaysia and Indonesia, the world's biggest producers.

In February, India slapped its heaviest-ever import duty of 75 per cent on crude palm oil and 85 per cent on refined palm oil.

Vajpayee, who underwent knee surgery in October, did not inspect the guard of honour at the welcoming ceremony, but he greeted dignitaries and posed for a group photograph with Mahathir.

Both leaders stood for their countries' national anthems by the Royal Malaysian Navy band in bright sunshine outside Mahathir's Putrajaya office.

Additional inputs: UNI

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