India-ASEAN To Rejig 15-Year Trade Pact In Early 2024

Syllabus: GS-II

Source: The Hindu

Subject: International Relations

Topic: Important International institutions

Issue: Trade Deficit with ASEAN Countries.

Context:  India seeks to narrow the trade deficit, currently standing at $43.57 billion, by revamping the ASEAN India Trade in Goods Agreement (AITGA) by 2025.


  • Since the implementation of AITGA in 2010, India’s trade deficit with ASEAN has surged from $7.5 billion to $43.57 billion.
  • India’s exports to the region in 2022-23 were valued at $44 billion, while imports were at $87.57 billion.


A comprehensive revaluation of the entire FTA is planned, focusing on India’s trade deficit with the region and to enhance market access for Indian businesses

  • The Commerce Department has collected inputs from various industry sectors regarding tariff and non-tariff barriers faced in ASEAN.
  • Sectors requiring attention include chemicals, alloys, plastics, rubber, minerals, leather, textiles, gems, and jewelry.
  • Changes in the Rules of Origin (ROO) will be incorporated to increase market access and prevent re-routing of goods through ASEAN countries.
  • The modernized AITGA will include a chapter on trade remedies to safeguard domestic industries against unfair trading practices or unforeseen surges in imports.
  • Areas such as environment, labor, MSMEs, or gender will not be added to prevent unnecessary complexities.

The negotiations represent a strategic move to align the FTA with the evolving economic landscape.

Conclusion: The upcoming negotiations for AITGA modernization signify India’s commitment to addressing trade imbalances and enhancing market access. The comprehensive review, focusing on specific sectors and introducing modern elements, aims to make the existing pact more efficient. The exclusion of new areas reflects a strategic approach to streamline the negotiations and achieve a balanced outcome, benefiting both India and ASEAN.

ASEAN Significance for India:

ASEAN, comprising ten member nations, accounted for 11.3% of India’s global trade in 2022-23.

  • It constitutes the 3rd largest market in the world. This can help India utilize its export potential.
  • ASEAN is a crucial component of India’s “Act East” policy and its “Indo-Pacific” strategy, reflecting the convergence of interests in the region.
  • Strengthening relations with ASEAN countries can serve as a counterbalance to China’s influence in the region.
  • Connectivity with the North East can boost economic development by positioning them as a hub for regional trade and commerce.

Important for rule-based order: ASEAN plays a central role in promoting a rules-based security architecture in the Indo-Pacific region, which is essential for the region’s stability and prosperity.

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