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India and the 10-nation bloc Asean are expected to formally launch the review exercise for the free trade agreement (FTA) in November. They have agreed to fast-track negotiations for the review of the existing agreement in goods between the two regions and conclude the talks in 2025. It was agreed during the twentieth AEM (Asean Economic Ministers)-India Consultation meeting held at Semarang, Indonesia, in August.
Participating in the 20th ASEAN-India Summit in Jakarta, Prime Minister Narendra Modi emphasised the need to complete the review of the ASEAN-India FTA (AITIGA) in a time-bound manner.
The FTA was signed in 2009 and implemented in January 2010.
The review of the AITIGA was a long-standing demand of Indian businesses, and the early commencement of the review would help in making the FTA trade facilitative and mutually beneficial, the India commerce ministry has said.
The two regions have agreed to follow a quarterly schedule of negotiations and conclude the review in 2025.
According to a joint media statement issued in Semarang, both regions have agreed to make the agreement more user-friendly, simple and trade-facilitative for businesses to increase trade and support sustainable and inclusive growth. India is asking for a review of the agreement with an aim to eliminate barriers and misuse of the trade pact.
In general, such review exercises include implementation issues, rules of origin; verification process and release of consignments; customs procedures; further liberalisation of trade in goods; and sharing and exchange of trade data.
Trade experts said the review demand is there because India's exports to Asean have been affected due to non-reciprocity in FTA concessions, non-tariff barriers, import regulations and quotas. Concerns have also been raised about the routing of goods from third countries in India through Asean members by taking the duty advantages of the agreement. Asean has a much deeper economic engagement with China through the Asean China Trade and Goods Agreement.
During 2010-11, India's exports to Asean increased to USD 25.7 billion from USD 18.11 billion in 2009-10. However, imports in 2010-11 rose to USD 30.6 billion from USD 25.8 billion in 2009-10.
Similarly, in 2022-23, India's exports to Asean increased to USD 44 billion from USD 42.32 billion in 2021-22. However, imports jumped to USD 87.57 billion in 2022-23 against USD 68 billion in 2021-22.
The trade deficit has widened to USD 43.57 billion in the last fiscal from USD 25.76 billion in 2021-22. It was just USD 5 billion in 2010-11.