The Association of Southeast Asian Nations (ASEAN) is actively pursuing an enhanced relationship with India, Secretary-General Dr. Kao Kim Hourn conveyed to Indian journalists. This desire for closer ties stems from recognizing the vast trade and investment possibilities between ASEAN countries and the South Asian giant.
Dr. Kao highlighted the potential benefits of this relationship, stressing, “We want a stronger relationship with India. Look at the positive side (of the relationship),” Dr Kao said.
The review of the India-ASEAN Free Trade Agreement (AITIGA), signed in 2009 and enacted in January 2010, stands as a key focus. Indian Prime Minister Narendra Modi, at the 20th ASEAN-India Summit in Jakarta, underscored the need for a prompt and effective review of AITIGA to enhance its trade facilitation and mutual benefits.
Prompted by Indian business sector demands, the review targets various aspects of the agreement, such as implementation challenges, customs procedures, further liberalization of trade in goods, and efficient trade data exchange. Both parties are committed to quarterly negotiations, aiming for the review’s completion by 2025.
India’s push for this review stems from a desire to remove trade barriers and prevent misuse of the pact. This need is evident in recent trade statistics. In 2022-23, India’s exports to ASEAN amounted to $44 billion, a modest increase from $42.32 billion the previous year. Contrastingly, imports from ASEAN escalated to $87.57 billion, resulting in a trade deficit of $43.57 billion – a significant rise from $25.76 billion in 2021-22 and markedly higher than the $5 billion deficit in 2010-11.
This increasing trade imbalance accentuates the urgency for a comprehensive and successful review of AITIGA. The agreement’s revision is crucial for maintaining its relevance and benefit for both India and the ASEAN member states, including Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar, and Cambodia.
As ASEAN and India navigate this period of economic recalibration, the outcomes of the FTA review will be closely watched, potentially setting a precedent for future trade agreements in the region.
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