No headway in India-ASEAN trade deal review despite 9 meetings in last one year

• AITIGA was signed in 2009 between India and the 10 ASEAN nations to boost trade by reducing tariffs and promoting economic integration.

• Under this agreement, India agreed to eliminate or reduce tariffs on 71% of its tariff lines (product categories).

• In contrast, ASEAN countries like Indonesia (41%), Vietnam (66.5%), and Thailand (67%) offered lesser access to their markets under similar terms.

• Over the past 15 years:

• India’s exports to ASEAN have doubled,

• But its imports from ASEAN have tripled.

• This growing trade imbalance is viewed as unfavorable for India’s domestic industries.

• Many Indian industries, especially in textiles, electronics, and chemicals, have raised concerns over being undercut by cheaper ASEAN imports.

• Investigations by Indian authorities revealed that some ASEAN countries are importing subsidised raw materials from China, processing them, and then exporting the final goods to India under the ASEAN trade agreement.

• Since goods processed in ASEAN enjoy preferential tariffs, this practice hurts Indian manufacturers and creates a backdoor for Chinese goods to enter Indian markets at low duties.

• Due to these concerns, India pushed for a formal review of AITIGA.

• ASEAN agreed to initiate the review, and a Joint Committee began discussions in February 2024.

• Since then, nine meetings have been held between India and ASEAN member states to assess and revise trade terms.

• According to sources, no concrete progress has been made so far on any of India’s concerns.

• ASEAN countries are reportedly resisting revisions, which India interprets as stonewalling the review process.

• India wants greater market access for its goods, stricter origin rules, and safeguards against misuse of the agreement, but these issues remain unresolved.

• The review is seen as essential for India to:

• Correct trade imbalances

• Protect domestic industry

• Prevent misuse of the FTA by third-party countries like China

• Without adjustments, the trade deal may continue to favor ASEAN at India’s expense.