Central Idea

India seeks to modernize the ASEAN India Trade in Goods Agreement (AITGA) to reduce the significant trade deficit with ASEAN nations in February 2023 with a target to complete the revamp by 2025.

About ASEAN-India Trade in Goods Agreement (AITGA)

	Details
Signing Date	August 13, 2009, w.e.f. January 1, 2010.
Objectives	Eliminate tariffs and liberalize trade in goods. Facilitate economic integration between ASEAN and India.
Key Features	Gradual reduction and eventual elimination of tariffs Measures to facilitate trade and customs efficiency
Member Countries	ASEAN Members: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam and India.
Economic Impact	Growth in trade between India and ASEAN countries – Diversification of trade basket.
Recent Developments	Discussions on reviewing and upgrading the agreement.
Challenges	Concerns over trade imbalances. Potential impact on certain domestic industries in India.
Strategic Significance	Part of India’s “Act East” policy. Step towards broader regional economic integration.

Significant Trade Partner: ASEAN countries, including Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar, and Cambodia, accounted for 11.3% of India’s global trade in 2022-23.
Existing Trade Imbalance: The current trade deficit with ASEAN stands at $43.57 billion, a substantial increase from $7.5 billion per annum when the pact was first implemented.
Trade Statistics: In 2022-23, India’s exports to ASEAN were valued at $44 billion against imports of $87.57 billion.
Rebalancing Trade: The primary goal is to address the disproportionate benefits that have favored ASEAN since the agreement’s implementation in 2010.
Modernization of the Agreement: The focus is on updating the FTA to reflect current global trade dynamics and include new elements like product-specific rules and trade remedies.

Rules of Origin (ROO): Modifications in ROO are planned to increase market access for Indian products and prevent the rerouting of goods, particularly from China, through ASEAN countries.
Trade Remedies: A new chapter on trade remedies will aim to protect domestic industries from unfair trade practices and import surges.
Exclusion of New Areas: The agreement will not expand to cover additional areas like labor, environment, MSMEs, or gender to avoid complicating the pact.

Need for Concessions: While India seeks to balance the trade deficit, concessions may be necessary to ensure mutual benefits.
Sectoral Focus: Industries such as chemicals, plastics, minerals, leather, textiles, and gems and jewellery are identified for potential growth in exports.

Strategic Approach: India’s efforts to modernize the AITGA reflect a strategic approach to enhance trade relations while protecting domestic interests.
Balancing Act: The challenge lies in negotiating terms that benefit both India and ASEAN members, fostering a more equitable trading environment.
Long-Term Implications: Successful negotiations could significantly impact India’s trade dynamics, potentially reducing the trade deficit and strengthening economic ties with ASEAN nations.