India-ASEAN to rejig 15-year trade pact in early 2024

Contact Counsellor

Last Updated27/12/2023

India and the ten-member ASEAN will begin negotiations in February to “modernise” their decade-and-a-half-old free trade agreement (FTA)
New areas such as labour, environment, SMEs and gender are likely to be kept out, sources have said.

“There will be a complete re-look at the entire FTA with the broad objective of bringing down the trade deficit for India.
New elements such as product specific rules and trade remedies will be brought in to make the FTA more efficient
The first round of negotiations for reviewing the FTA, officially known as the ASEAN India Trade in Goods Agreement (AITGA)
The negotiations will follow a quarterly schedule to wrap up the exercise by 2025.
India has been long pressing for a review of the AITGA, which was signed in August 2009 and implemented in January the following year
- As the pact resulted in disproportionate benefits for ASEAN.
Sectors that need propping up include chemicals and alloys, plastics and rubber, minerals, leather, textiles, gems and jewellery, per an industry analysis.
India will also need to make some concessions for the ASEAN as the review will have to benefit both but the objective of bringing balance has to be central

Modernising the AITGA will include incorporating changes in the Rules of Origin (ROO)
- It can work in favour of India by increasing market access for some items
- Blocking possible re-routing of goods by China through the ASEAN countries
ROO are the criteria to determine the origin of a product and establish if it qualifies for duty cuts under an FTA.
“PSRs will be introduced in the ROO chapter which can help India have relaxed rules for certain items to increase exports.
A chapter on trade remedies will seek to provide a safety net for domestic industry against unfair trading practices or unforeseen surges in imports of goods