India facing Tariff asymmetry in ASEAN agreement

India is experiencing an expanding trade deficit with the Association of Southeast Asian Nations (ASEAN) and is seeking to address tariff imbalances in the India-ASEAN Free Trade Agreement (FTA).

PM Modi Highlights Trade Imbalance with ASEAN at 21st Summit

• This issue was highlighted during the 21st ASEAN-India Summit, where Prime Minister Narendra Modi presented a 10-point plan to strengthen cooperation between India and ASEAN.
• Tariff Asymmetry with ASEAN: ASEAN-India Free Trade Agreement (AIFTA) has led to asymmetric tariff reductions which has several disadvantages for India.
  • While India has reduced tariffs on about 74% of its tariff lines for ASEAN countries, the latter have reciprocated for only about 56% of their tariff lines in sectors like Agriculture and Textiles.
• Trade Deficit: This tariff structure Led to the surge in imports from ASEAN widening the trade deficit for India which reached USD 43.57 billion in 2022-23.

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About India-ASEAN Trade

• ASEAN is India’s 4th largest trading partner with total trade at $131.5 billion in 2022-23.
  • Trade with ASEAN has around 11% share in India’s global trade.
• Singapore is India’ largest trade partner in ASEAN and 6th largest trade partner worldwide 
• Trade Imbalance: India’s trade deficit with the ASEAN has surged, more than doubling since the implementation of the Free Trade Agreement (FTA) in 2010.
  • For instance in the fiscal year 2022-2023, India’s exports to ASEAN countries amounted to USD 44.04 billion, while imports significantly outpaced this, reaching USD 87.58 billion during the same period.
  • This imbalance is particularly pronounced in sectors like electronics and machinery.

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