The Association of Southeast Asian Nations (ASEAN) and India are set to start talks in February according to a report of The Hindu, with the goal of updating their present free trade agreement (FTA) and resolving the trade gap, which is currently $43.57 billion. By 2025, the program aims to update the ASEAN-India Trade in Goods Agreement (AITGA).

In order to “modernize” their fifteen-year-old free trade agreement (FTA) and balance it more in favour of New Delhi, negotiations between India and the ten ASEAN members are set to start in February.

However, reports claim that new topics including gender, SMEs, the environment, and labor will probably be left out.

The main focus of the negotiations will be on the implementation of trade remedies and product-specific regulations, with the ultimate objective of improving the FTA’s effectiveness.

Acknowledging the necessity of a thorough revision, the talks will cover important topics including the Rules of Origin (ROO) and the inclusion of a special chapter on trade remedies to protect home industries.

Does India runs Trade Deficit with ASEAN Region?

When the agreement was put into effect, India’s trade imbalance with the region was only $7.5 billion annually; it has subsequently risen to $43.57 billion. India’s imports totaled $87.57 billion in 2022–2023 while its exports to the region were valued at $44 billion.

According to an industry analysis, industries that require support include chemicals and alloys, rubber and plastics, minerals, leather, textiles, jewels, and jewelry.

“The goal of bringing balance has to be central, but India will also need to make some concessions for the ASEAN as the review will have to benefit both,” an industry official stated.

One source stated that modernizing the AITGA will entail implementing modifications to the Rules of Origin (ROO), which may benefit India by expanding market access for specific goods and preventing potential rerouting of exports by China through the ASEAN nations.

The Association accounted for 11.3 per cent of India’s global trade in 2022-23.

The ASEAN upcoming Meeting Highlights

According to officials, India and the ten Asean members will shortly begin a review meeting of the current free trade agreement (FTA), which was signed in August 2009 and went into effect in 2010. The purpose of the meeting is to examine methods to make the agreement more “modern.”

The sequence of events highlights the dedication to effectively restructuring the AITGA, transforming it into a more flexible and adaptable tool in the context of economic relations between India and ASEAN.

A source mentioned that the updated AITGA will include a section on trade remedies, which aims to shield home businesses against unfair trade practices or unanticipated spikes in imports of goods.

To start the negotiations, a group made up of important officials from Asean countries is anticipated in New Delhi on February 18 and 19.
The countries that make up the Asean are Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
A quarterly timetable for the negotiations will be further followed in order to complete the exercise by 2025.