India’s free trade agreement with ASEAN has failed to deliver balanced gains, with a widening trade deficit and limited market access for Indian goods. As review talks intensify, India is pushing for structural reforms to address tariff asymmetries, Chinese competition, and last-mile implementation hurdles.
India’s decade-old free trade pact with the Association of Southeast Asian Nations (ASEAN) is under renewed scrutiny as the trade deficit continues to widen. Despite bilateral trade crossing $123 billion in 2024–25, India’s exports remain constrained by tariff barriers and limited access to key ASEAN markets. The ongoing review of the ASEAN-India Trade in Goods Agreement (AITIGA) aims to address these persistent challenges.
Key Highlights
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India’s trade deficit with ASEAN touched nearly $45 billion in FY25, raising concerns over the pact’s effectiveness
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Indian exporters face high tariffs and non-tariff barriers in ASEAN countries, especially for agricultural products, pharmaceuticals, and automobiles
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ASEAN nations enjoy easier access to Indian markets, creating an imbalance in trade flows
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Chinese investments in ASEAN have further complicated India’s competitive position, especially in electronics and manufacturing
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India has submitted counter proposals seeking greater market access in Indonesia, Vietnam, Thailand, and Cambodia
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The review process, expected to conclude by year-end, focuses on last-mile implementation issues and harmonization of standards
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External Affairs Minister S. Jaishankar is leading India’s representation at the ASEAN Summit in Kuala Lumpur, while Prime Minister Modi remains on the campaign trail
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ASEAN officials have acknowledged India’s concerns and are working toward a mutually beneficial revision of the agreement
Experts argue that unless structural reforms are introduced, India risks being sidelined in the region’s fast-evolving trade ecosystem. The review offers a critical opportunity to recalibrate the pact and ensure equitable benefits for Indian industries.
Sources: The Hindu Business Line, Daily Pioneer, Economic Times, Straits Times, Vajiram & Ravi