Mint | 29 January 2024
ASEAN delegation to visit India on 17 Feb for FTA review
by Dhirendra Kumar , Rhik Kundu
New Delhi: India and ASEAN member countries are set to revisit their free trade agreement (FTA). A delegation from Southeast Asia, comprising about 50 members, including high-ranking officials, will arrive in New Delhi for a three-day discussion starting 17 February, according to two people aware of the matter. -
The review will focus on the ASEAN Trade in Goods Agreement (ATIGA), which has been in place for over a decade, and will likely include more goods and services under non-tariff barriers, said one of the persons cited above.
"There is also a need to modernise the ATIGA, which has been signed over a decade ago," the person said, requesting anonymity.
Officials from India and ASEAN have established a quarterly negotiation schedule, aiming to conclude the review by 2025. A key aspect of this review will be updating the Rules of Origin (ROO), to enhance the efficiency of the agreement, the person added.
The Rules of Origin are crucial in international trade, as they determine the national origin of products for government and international trade treaty purposes.
India’s commerce ministry and ASEAN secretariat had not responded to emailed queries sent on 25 January.
Signed in 2009, the AITIGA came into effect in 2010. The decision to review it came at the 16th ASEAN-India Economic Ministers Meeting in September 2019, following multiple requests from member nations. The scope of the review was finalized in September 2022, with the first meetings scheduled for February 2024.
India’s trade deficit with ASEAN has grown significantly, from $7.5 billion annually when the agreement came into effect to approximately $44 billion in FY23. This fiscal year so far, India has exported goods worth $44 billion to the region, while imports stood at $87.57 billion.
The ASEAN comprises of Brunei Darussalam, Burma, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand, and Vietnam. These countries represented about 11% of India’s global trade in FY23.
India’s trade with ASEAN has evolved from agricultural raw materials and food to manufactured goods. India imports items like palm oil, coal, and minerals from ASEAN countries, while exporting transport equipment, chemicals, textiles, and other manufactured and agricultural products.
The FTA review aligns with the Indian government’s Look East policy. Experts suggest that restructuring trade and investment relations with ASEAN is crucial, as these economies are poised to significantly influence global trade flows.
Dattesh Parulekar, assistant professor of International Relations at Goa University, highlights the importance of equitably addressing market access issues in goods and services trade. “India and ASEAN need to address each other’s concerns towards building a common supply chain product lines resilient framework, even whilst addressing concerns that RCEP (Regional Comprehensive Economic Partnership) provisions will override mutual trade accords."