The ASEAN-India Trade in Goods Agreement (AITIGA) is once again in the spotlight as the ninth round of review meetings ends with little to no progress. The ongoing negotiation to revisit India’s trade pact with the Association of Southeast Asian Nations (ASEAN) began in 2019, following India’s request to address its widening trade deficit with the region. Earlier this year, Malaysia, which holds the ASEAN Chairmanship in 2025, agreed to conclude the review talks by the end of the year.
According to reports, the ten-nation bloc remains highly reluctant to address some of India’s key concerns. Critics argue that AITIGA, which came into force under the UPA government in 2010, was negotiated without adequately safeguarding the interests of Indian industries. As a result, during the first decade of the agreement, India’s exports to ASEAN grew by only 65%, while imports from the region surged by 186%.
With the debate around AITIGA resurfacing, this explainer breaks down the key issues surrounding India’s trade pact with its Southeast Asian neighbours.
What is the India-ASEAN FTA?
In 2003, India and the member states of ASEAN (Indonesia, Malaysia, Singapore, Thailand, Vietnam, the Philippines, Myanmar, Brunei, Laos, and Cambodia) signed a Framework Agreement on Comprehensive Economic Cooperation, committing to establish an India-ASEAN Regional Trade and Investment Area (RTIA) that includes a free trade area in goods, services, and investment.
Building on this framework, India signed the AITIGA in 2009 after six years of negotiations. It came into force in 2010, as the first step toward easing tariff barriers between the two regions. Following this, in 2014, the ASEAN-India Trade in Services Agreement (AITISA) and the ASEAN-India Trade in Investment Agreement (AITIIA) were signed by India and ASEAN members. These three agreements are collectively known as the ASEAN-India Free Trade Area or AIFTA.
Trade relations between India and ASEAN have grown significantly since the AITIGA came into effect. ASEAN has emerged as one of India’s most important trading partners, accounting for nearly 11% of its total global trade. However, this growth has not been evenly beneficial, as the increased trade volume has disproportionately favoured ASEAN member states. India’s trade deficit with the region has widened steadily over the years, and overall trade remains far below the ambitious target of $300 billion by 2025. When India entered the negotiations with ASEAN in 2003, it was relatively inexperienced in free trade diplomacy. As a result, Indian negotiators failed to safeguard the interests of domestic industries while allowing significant concessions for ASEAN countries. According to reports, India agreed to eliminate or reduce tariffs on 71% of its traded products, while ASEAN members refused to extend similar concessions to India. Indonesia reduced tariffs on just 41% of its traded products, Vietnam on 66.5%, and Thailand on 67%. This imbalance in commitments has remained a major source of dissatisfaction for Indian stakeholders and is one of the central issues driving the current review of the agreement.
(Value in USD), Source: https://comtradeplus.un.org/
Why is India seeking a review?
India’s demand for a review of the AITIGA is driven by a range of concerns, including the widening trade imbalance, limited market access for Indian exporters, and structural weaknesses in the agreement that allow for indirect dumping. Reports suggest that the deal has done only very little to boost Indian exports, especially in sectors like engineering goods and products from small-scale industries. Many exporters also find the Rules of Origin (RoO) and documentation requirements under AITIGA overly complex and difficult to comply with. As a result, a significant portion of India’s exports to ASEAN do not benefit from the tariff preferences and smoother procedures that the agreement was meant to provide.
At the same time, ASEAN countries enjoy relatively easier access to the Indian market. Most products from the region are able to enter India with minimal processing, taking advantage of AITIGA’s relaxed RoO, which considers any product that has at least 35% local value addition as a product originating from ASEAN. This has created a loophole that allows several Chinese products, particularly from sectors like electronics, machinery, and chemicals, to enter the Indian market through ASEAN countries. As the ASEAN importers are able to flood the Indian market with Chinese goods, bypassing India’s trade restrictions and tariffs, AITIGA raises serious concerns about indirect dumping.
Beyond the issues of tariff barriers and procedural complexity, Indian exporters face several other challenges, ranging from licensing hurdles and rigid technical standards to inspection delays in ASEAN countries. Despite the formal tariff concessions granted under AITIGA, such restrictions continue to remain in operation in most ASEAN countries, creating an uneven playing field for Indian goods and services.
Moreover, India’s evolving trade policy, which increasingly prioritises national interests and fair competition, can also be seen as a reason behind India’s push for review of AITIGA. India is seeking a country-wise reassessment of the deal to address its widening trade imbalance with the region and make the deal more ‘user-friendly, simple and trade facilitative’.
(Value in USD), Source: https://comtradeplus.un.org/
What are the sticking points in the ongoing negotiations?
The review negotiations over the trade pact is being conducted through the AITIGA Joint Committee, supported by eight sub-committees focusing on crucial areas such as market access, RoO, sanitary and phytosanitary (SPS) measures, standards and technical regulations, customs procedures, economic and technical cooperation, trade remedies, and legal and institutional provisions. Despite this well-structured framework, the negotiations have struggled to gain momentum.
Although official statements have described the discussions as “constructive”, media reports indicate that ASEAN countries have largely been unwilling to address India’s key concerns. Many of them want to preserve existing trade advantages and maintain supply chain stability. According to news reports and expert commentary, India is seeking a modernised trade deal that distributes benefits more evenly across the board. The intense discussions are reportedly centred on product-specific rules (PSRs) for value-addition norms on inbound shipments, enhanced market access for Indian products, and the streamlining of non-tariff barriers. However, detailed information about the specific points of contention between the two sides remains limited in the public domain.
While India aims for a swift conclusion by the end of 2025, ASEAN countries prefer a consensus-driven approach that allows more time for deliberation on each proposal. This fundamental difference in approach may be one of the reasons for the slow progress in negotiation. With limited transparency and differing expectations, the road ahead remains uncertain. Whether the review can lead to a more balanced and modern agreement will depend on the political will on both sides to address sensitive concerns without derailing the broader trade relationship.
