India and Asean – the country’s second largest trading partner after the European Union – agreed to review their 13-year-old trade agreement.
The move follows repeated attempts from New Delhi, which believes the agreement is not benefiting Indian exporters with commerce minister Piyush Goyal calling it “most ill-conceived”.
India’s concerns stem from some of its exports, such as steel products, not getting full benefit of the treaty. Besides, there are complaints of Chinese products, such as set-top boxes, finding their way into India through an Asean nation taking advantage of the concessional duty rate offered under the trade treaty.
“Today, in a significant development, India and Asean agreed for a time-bound review of the Asean-India Trade in Goods Agreement. Both sides agreed for a quarterly negotiation schedule, aiming to complete the review in 2025… The FTA review is expected to expand and diversify India’s exports to the Asean region and address the present tariff asymmetry,” the commerce department said on Monday.
A review, which is usually done every year or two, has been long overdue as the agreement did not mention a date. One of the concerns with the agreement was that the Manmohan Singh government, due to pressure from the external affairs ministry, agreed to split the goods and services negotiations, which resulted in India not extracting the maximum benefit. But the exercise is fraught with the risk that Asean may demand further liberalization from India in return of agreeing to some of its demands. Besides, unlike the European Union, the 10-nation Asian trading bloc sees each member offer a different set of concessions while seeking a uniform proposal from its partner. India had agreed to eliminate tariffs on 70% of the products from Asean countries, which was lower than what was agreed to with others such as Japan (85%).
