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.

Enroll now for UPSC Online Classes

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.