India focussed on maximising exports, blocking China: ASEAN FTA

India will focus on maximising its exports to the ASEAN bloc by addressing specific market access issues with each country in the on-going round of the ASEAN-India free trade agreement review, sources have said.

“The idea is to have a more balanced trade with the ASEAN through the review. Since we implemented the pact in 2010, different ASEAN countries have moved differently in terms of their export competitiveness and import intensiveness. So we are looking from that perspective and trying to maximise our trade volumes with these countries,” an official tracking the matter said.

New Delhi will also try to ensure that the rules of origin (ROO)–the criteria to determine the national origin of a product—are stringent enough to ensure that third country imports, especially from China, do not come through the bloc at preferential tariffs.

“The key drivers of the ASEAN-India FTA are ROO and market access. We want to see that the ground principles in these two areas are agreed upon in the on-going round,” the official said.

The chief negotiators from the ten ASEAN countries– Brunei, Burma, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand, and Vietnam –are in Delhi this week participating in the fourth round of review of the bilateral FTA, officially called the ASEAN-India Trade in Goods Agreement (AITIGA).

The AITIGA, implemented in 2010, resulted in disproportionate gains for the ASEAN countries. While India’s exports to the bloc increased to $41.2 bn in FY 2023-24 from $25.62 billion in FY2010-11, imports shot up to $79.66 billion in FY 2023-24 from $30.6 billion in FY 2010-11.

Under the pact, both sides agreed to open their respective markets by progressively reducing and eliminating duties on 76.4 per cent coverage of good. However, the ASEAN countries did not take on uniform commitments and had a diverse duty structure with countries like Vietnam taking lower commitments, which India wants to be corrected in the review.

With China’s increased integration with the ASEAN countries over the past decade and a half, India also wants that the ROO should be effective in blocking imports of Chinese products through the ASEAN countries.

“The ROO needs to be stringent enough to block inflow of Chinese goods into India from the ASEAN countries at nil or low interest rates. India has to protect against that,” the official said.