Introduction
India and the Association of Southeast Asian Nations (ASEAN) have shared a forms-based Free Trade Agreement since 2009, entering into force in January 2010. Over the last decade, ASEAN has become one of India’s top trading partners—one that now accounts for approximately 11% of India's global trade WikipediaBusiness Standard+7Business Standard+7Business Standard+7Vajiram & Ravi+3Business Standard+3The Economic Times+3.
Yet, the trade relationship has turned increasingly asymmetrical. Rising Indian concerns over widening deficits, misuse of tariff concessions, and damage to domestic manufacturing have prompted New Delhi to pursue a comprehensive upgrade of the ASEAN‑India Trade in Goods Agreement (AITIGA). The goal: a modernized, mutually beneficial, and sustainable trade framework.
Current Trade Landscape and the Need for an Upgrade
Trade Imbalance
-
In FY 2023–24, India exported ~$41.2 billion worth of goods to ASEAN but imported ~$80 billion, resulting in a growing trade deficit of USD ~44 billion Vajiram & RaviThe Economic Times+1The Times of India+1.
-
Imports surged faster (234%) than exports (130%) since the agreement’s inception, raising concerns over the unequal distribution of benefits Vajiram & Ravi.
Inverted Duty Structure & Rules of Origin Abuse
India’s manufacturing sector faces structural disadvantages because import duties on inputs often exceed those on finished goods, allowing ASEAN goods—or even re‑routed third‑country goods—to flood Indian markets duty‑free Reddit+2Business Standard+2Vajiram & Ravi+2. India is reviewing rules of origin to curb transshipment or exploitation of FTA benefits by third countries Hindustan Times+1Reddit+1.
Review Process: Structure, Rounds, and Progress
Eight Sub‑Committees Under AITIGA
Negotiations are conducted through eight thematic groups covering:
-
Market access & national treatment
-
Rules of origin
-
Standards & technical regulations
-
Sanitary and phytosanitary measures
-
Customs procedures & trade facilitation
-
Trade remedies
-
Economic & technical cooperation
-
Legal & institutional provisions Reuters+6Hindustan Times+6The Economic Times+6The Times of IndiaThe Economic Times+4IndBiz | Economic Diplomacy Division+4Business Standard+4
Negotiation Timeline
-
Review mandate established in 2022, with formal talks launching in February 2024 Wikipedia+13Business Standard+13The Economic Times+13.
-
As of mid-2025, nine rounds of discussions have taken place, but progress remains limited, especially on substantive reforms The Times of India.
Stalled Momentum
Despite India’s push, ASEAN countries have shown reluctance to make major amendments, slowing the pace of talks Business Standard. India and Malaysia have agreed to accelerate talks, aiming to finalize substantial review by 2025 Business Standard+1Hindustan Times+1.
India’s Strategic Demands and Objectives
Protect Domestic Manufacturing
The Make in India initiative drives India’s call for:
-
Fixing inverted duty anomalies
-
Applying reciprocal treatment for ASEAN imports
-
Ensuring fair rules of origin to prevent misuse Reddit+3Business Standard+3The Times of India+3Reddit+7Hindustan Times+7Vajiram & Ravi+7IndBiz | Economic Diplomacy Division
Ensure Trade Facilitation and Market Access
India insists on:
-
Reduced non‑tariff barriers (NTBs)
-
Easier customs procedures
-
Enhanced access for Indian exporters in key sectors such as textiles, agro‑products, chemicals, and mobile parts Hindustan Times
Modernize & Align with Global Trends
Given changing economic realities, India seeks to recalibrate the 15-year-old pact to reflect current trade patterns and strategic imperatives—especially digitization, standardization, and investment facilitation The Times of India+8Vajiram & Ravi+8The Times of India+8.
Connectivity Imperatives Complementing Trade
Physical Corridor Projects
Infrastructure projects like the India–Myanmar–Thailand (IMT) Trilateral Highway and the Kaladan multi-modal corridor aim to physically link India’s Northeast to ASEAN markets, reducing logistical costs and trade friction Wikipedia+2Wikipedia+2Reddit+2.
-
However, the IMT Highway has been stalled by conflict in Myanmar, necessitating ASEAN support for phased revival Reddit+1Wikipedia+1.
Broader Regional Integration
These connectivity efforts not only support trade but also deepen India’s integration with ASEAN under its Act East Policy, enabling smoother supply chains and increased export potential WikipediaWikipedia.
Implications of Major Global Trade Shifts
The global trade environment is shifting, driven by:
-
Protectionist policies such as U.S. tariffs
-
Restructured supply chains away from the U.S. and China
-
Greater regional trade realignments favoring ASEAN and India ft.com+1ft.com+1
A recalibrated India‑ASEAN trade agreement is central to India’s strategy for diversifying trade, leveraging regional strength, and reducing dependence on Western markets.
Conclusion
India’s bid to upgrade the ASEAN–India trade agreement reflects a strategic attempt to rebalance and modernize a key economic partnership. With ASEAN accounting for over 10% of India’s trade, the stakes are high.
The current review—spanning tariffs, rules of origin, customs norms, and non‑tariff barriers—is essential to:
-
Mitigate structural trade imbalances
-
Protect domestic manufacturing
-
Enhance market access for Indian exporters
-
Align with evolving global trade dynamics
While the ASEAN bloc has shown caution toward major reforms, India continues to press for accelerated resolution of talks, aiming for substantial completion by 2025. Central to success will be sustained negotiation momentum, regional cooperation (especially with Malaysia), and tangible outcomes across all sub‑committee areas.
If achieved, a modernized AITIGA will strengthen India’s Act East ambitions, connect domestic producers to Southeast Asian markets more effectively, and enhance India’s position in the emerging Indo-Pacific trade architecture. In a rapidly evolving global economy, a balanced upgrade could pave the way for deeper integration, growth, and mutual prosperity.