India, ASEAN agree to review goods trade pact by 2025 to fix ‘asymmetry’

Source: The post is based on the article “India, ASEAN agree to review goods trade pact by 2025 to fix asymmetry”  published in The Hindu on 22nd August 2023.

What is the News?

India and the Association of Southeast Asian Nations(ASEAN) have agreed to conclude the review of the ASEAN-India Trade in Goods Agreement(AITIGA) by 2025.

What is ASEAN-India Trade in Goods Agreement (AITIGA)?

ASEAN-India Trade in Goods Agreement is a trade deal signed in 2009.

The agreement covers trade in physical goods and products. It does not apply to trade in services. 

ASEAN and India signed a separate ASEAN-India Trade in Services Agreement in 2014.Along with ASEAN-India Investment Agreement, the three agreements collectively form the ASEAN-India Free Trade Area.

Why is there a need to review the ASEAN-India Trade in Goods Agreement(AITIGA)?

Trade Deficit: In 2022-23, India’s exports to ASEAN increased to $44 billion from $42.32 billion in 2021-22.

– However, imports grew faster as it jumped to $87.57 billion in 2022-23 against $68 billion a year ago.

– The trade deficit widened to $43.57 billion in the last financial year, from $25.76 billion in 2021-22. It was just $5 billion in 2010-11.

– In this context, India’s Commerce and Industry minister had said the trade agreement with ASEAN was an “ill-conceived” agreement and unfair to the Indian industry.

Other concerns of India: India has been worried about the routing of goods from third countries in India through ASEAN countries members by taking the duty advantages of the agreement.