India-ASEAN Trade Pact Overhaul Delayed Amid Tariff Disagreements

India’s planned revision of its 14-year-old trade agreement with the Association of Southeast Asian Nations (ASEAN) is encountering delays, as the bloc’s members push to negotiate tariffs individually rather than adopting a unified tariff structure. The review, initially expected to be finalised at next month’s Jakarta meeting, has been stalled due to resistance from several ASEAN countries, news reports said.

Shift in ASEAN’s Approach

India had proposed a unified duty structure for all ASEAN members, which would apply uniformly across the region. However, ASEAN members have not embraced this approach, with some countries preferring to negotiate their tariffs separately. This shift in position from ASEAN could extend the review process and leave the future of the agreement uncertain, media reports indicated.

India’s Concerns Over Tariff Concessions

India has expressed concerns over tariff concessions granted under the ASEAN Trade in Goods Agreement (ATIGA), particularly those favouring Vietnam. These concessions, which allow zero-tariff imports of mobile phone components into India, have raised concerns among domestic manufacturers. India is now seeking to reassess these terms to safeguard its industries and create a more balanced trading environment.

Overview of the ASEAN Trade in Goods Agreement (ATIGA)

The ATIGA, signed in 2009 and implemented in 2010, has helped strengthen regional economic ties and boost trade between India and ASEAN. However, the trade balance remains heavily tilted in favour of ASEAN, a global manufacturing hub. India’s trade with the bloc is largely concentrated in five key countries: Indonesia, Singapore, Malaysia, Thailand, and Vietnam.

Challenges of Harmonising Tariffs

ASEAN is not a customs union, which means its member countries do not have identical tariff structures. This disparity makes it challenging to harmonise trade policies, leading some ASEAN members to call for separate negotiations, similar to past trade discussions.

Delay in Finalising the Review

The review, initially expected to conclude by February 2025, is likely to continue for a longer period as ASEAN countries wish to address their concerns individually. News reports also added that the discussions said that the dialogues are expected to drag on, with separate negotiations for each country within the bloc.

Frustrations with the Existing Agreement

India has previously expressed frustration with the current ATIGA, viewing it as imbalanced. The agreement proposed tariff elimination for 74.2% of tariff lines and a reduction for an additional 14.2% of tariff lines, but no tariff concessions were granted for the remaining 11.6%. Commerce Minister Piyush Goyal has voiced strong criticism, calling the agreement “ill-conceived” and “unfair” to Indian industry.

Growing Trade Between India and ASEAN

Despite these concerns, trade between India and ASEAN has seen substantial growth since the agreement’s signing. Between FY09 and FY23, India’s exports to ASEAN increased by 130.4%, while imports surged by 234.4%. However, more than half of India’s imports from ASEAN consist of raw materials like coal and palm oil, highlighting the imbalance in the trade relationship.

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