ASEAN and India agree to review FTA on decade of anniversary
Khmer Times - 12 February 2021
ASEAN and India agree to review FTA on decade of anniversary
By Tom Starkey
According to regional analysts ASEAN Briefing (AB), trade ministers from India and the Southeast Asian association agreed this month to start discussions on reviewing the scope of the ASEAN-India free trade agreement (AIFTA), some 10 years after it came into force.
The news comes after the eighth East Asia Summit (Economic Ministers’ Meeting), held virtually because of the pandemic, and follows the 17th ASEAN-India Economic Ministers Consultations conducted over the weekend.
The official statement released from the event said: “The ministers from India and the ASEAN countries instructed their senior officials to start discussions to determine the scope of the review at the earliest to, inter-alia, make the free trade agreement more user-friendly, simple and trade-facilitative for businesses.”
India’s exports to ASEAN in 2019-20 were worth $31.49 billion, while its imports from the region reached $55.37 billion. Meanwhile, India’s merchandise exports to the 10-member ASEAN increased from $23 billion in 2010 to $36 billion in 2018 at a compound annual growth rate (CAGR) of about 5 percent, while its merchandise imports from the bloc increased from $30 billion in 2010 to $57 billion in 2018, a CAGR of about 8 percent.
With the pandemic’s effects being felt globally, the India-ASEAN economic dialogue comes at a good time for both sides.
AB said: “India wants to collaborate with ASEAN to produce generic drugs and medical technologies used for COVID-19 treatment. It is also seeking to clarify that its “Atmanirbhar Bharat [self-reliant] initiative” does not mean a protectionist trade and investment environment, but instead is aimed at “upscaling the growth of Indian industry”.
India is the largest provider of generic medicines globally – it has a 20 percent share in global supply by volume and supplies 62 percent of the global demand for vaccines. India is ranked third worldwide for production by volume and 10th by value,” it added.
The country also has the fourth-largest medical devices industry in Asia and is among the top 30 globally, with India’s pharmaceutical industry valued at about $41 billion.
Giving attention to India’s role in providing pandemic relief, commerce minister Piyush Goyal said that it had provided medical assistance, “in the form of essential drugs, test kits and protection gear to more than 150 countries and as grants-in-aid to over 80 countries”.
However, priority among India’s concerns is that Indian exporters have been denied a level playing field in the Southeast Asian market, added AB.
Indeed, spats between India and certain bloc members over customs duty cuts – such as Indonesia and Thailand – have left a sour taste in the regional heavyweight’s mouth.
“The current AIFTA framework calls for a 35 percent minimum value addition in one of the ASEAN countries to qualify for FTA treatment in India. India fears that this has been misused by China-based manufacturers to benefit from tariff relaxations via a third country that is part of the FTA while India is deprived of even reciprocal market access,” AB said.
The next ASEAN-India Leaders’ Summit is scheduled to be held in November 2021.
