The latest 17th ASEAN-India Economic Ministers Consultations took place virtually, with representation from India and Vietnam as co-chairs. Attending the meeting were Trade Ministers from all the ten ASEAN countries – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam.
Combined efforts against Covid-19
The ministers at the meeting collectively reaffirmed their commitment to mitigate the economic effect of the Covid-19 pandemic. Plans were made towards ensuring macroeconomic and financial stability alongside an unbroken supply chain, particularly for essential goods and medicines, complying with World Trade Organization (WTO) regulations.
AIBC’s Recommendations
A report was presented by the ASEAN India Business Council (AIBC) suggesting a review of the ASEAN India Trade in Goods Agreement for mutual benefits. This revamp would modernize the agreement, streamline customs procedures, and enable easy trade practices. Established in March 2003, AIBC aims to provide a platform for dialogues and idea exchange among key private sector players from India and the ASEAN nations.
Review on AITIGA
Conversations were carried out regarding the review of the ASEAN India Trade in Goods Agreement (AITIGA). Notably, AITIGA is a free trade agreement that has been effective since January 2010 among the ten member states of ASEAN and India. Emphasizing the urgency for a thorough review, India highlighted the necessity of strengthening the Rules of Origin provisions, removing non-tariff barriers, and providing improved market access.
Concerns Regarding FTA
There is a growing concern about FTA within India due to an increase in trade deficits with a number of ASEAN partners. As per data, India’s trade deficit with ASEAN rose from approximately 5 billion USD in 2011 to 21.8 billion USD in 2019.
Background of the ASEAN-India Relations
India and ASEAN, in 2003, signed an agreement to create an ASEAN-India Regional Trade and Investment Area. This was created to form the basis for subsequent free trade agreements covering goods, services, and investments. However, India withdrew from the Regional Comprehensive Economic Partnership (RCEP) in November 2019 during the ASEAN+3 summit due to increasing trade deficits and tension with China.
Recent Participation
India recently took part in the 6th roundtable meeting of ASEAN-India Network of Think Tanks (AINTT). Here, India pointed out the obstacles that were preventing a strong and efficient response to the Covid-19 pandemic.
The Road Ahead
An immediate review of the agreement and effective utilization of the ASEAN-India Free Trade Agreement could contribute to realizing the trade target of 200 billion USD set by India and ASEAN by 2020. Over-dependence on China can be mitigated by developing a mutual platform with ASEAN countries. Furthermore, improved collaboration and partnership with ASEAN aligns perfectly with India’s Act East Policy.