Context
The India-ASEAN Free Trade Agreement (FTA), formally known as the ASEAN-India Trade in Goods Agreement (AITIGA), was signed in 2009 and came into effect in 2010. Over the past 15 years, this agreement has facilitated trade between India and the 10-member ASEAN bloc, which includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. However, the current Indian government has expressed dissatisfaction with the deal, citing persistent trade imbalances and asymmetrical benefits.
Current Status of Review Negotiations
Despite nine rounds of negotiations since 2022, the review of the AITIGA has made little progress. Both sides agreed in 2023 to conclude the review by 2025, but talks have moved at a glacial pace, with ASEAN described as “stonewalling” the process. Indian officials have highlighted that while India opened up 71% of its tariff lines to ASEAN countries, some members like Indonesia granted access to only 41% of products, with Vietnam and Thailand offering access to about two-thirds of their tariff lines. This asymmetry has become a central point of contention.
Key Issues in the Review
- Trade Imbalance: India’s exports to ASEAN have doubled over the last 15 years, but imports from ASEAN have more than tripled. In 2022-23, India exported around $44 billion to ASEAN but imported $87.57 billion, resulting in a trade deficit of $43.57 billion. This growing deficit is a major concern for Indian policymakers.
- Tariff Line Disparities: India has offered duty concessions on over 71% of its tariff lines, but several ASEAN members have reciprocated with significantly lower levels of access for Indian goods.
- Non-Tariff Barriers and Third-Country Routing: India is also concerned about non-tariff barriers and the alleged routing of goods, particularly from China, through ASEAN countries to take advantage of lower tariffs under the FTA.
Industry and Economic Implications
Indian industry leaders have long demanded a review of the FTA to address the trade asymmetry and to ensure a level playing field. The stagnation in negotiations has led to mounting frustration, with calls for India to consider retaliatory measures if ASEAN fails to address these concerns. The review is seen as crucial for balancing trade and making it more sustainable for Indian businesses.
Conclusion
The India-ASEAN FTA review remains deadlocked after nine rounds of talks, with little progress on addressing the core issues of trade imbalance and tariff line disparities. The ongoing statemate highlights the complexities of renegotiating international trade agreements to reflect current economic realities and the need for a more equitable partnership between India and ASEAN. The outcome of these negotiations will have significant implications for India’s trade strategy and its economic relationship with Southeast Asia.
Source: The Hindu
UPSC Mains Practice Question
Q. Critically examine the achievements and challenges of the India-ASEAN trade partnership. Suggest measures to make the relationship more equitable and strategic.
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