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India’s free trade agreements with Asean

Topics Covered:

  1. India and its neighbourhood- relations.


India’s free trade agreements with Asean


What to study?

For Prelims: India and it’s FTA with Asean.

For Mains: An analysis and ways to address the concerns.


Context: A report, analysing the benefits of India’s free trade agreements with Asean has been released.

The report has been prepared by the PHD Chamber of Commerce and Industry.



Asean compromises 10 countries including Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.

India had signed an FTA in goods with the regional bloc in 2009, known as the Asean–India Free Trade Agreement (AIFTA). In 2014, an FTA in services was also included.


Key findings:

  1. Overall, India failed to benefit from free trade agreements (FTAs) with the Association of South East Asian Nations (Asean).
  2. In fact, India’s trade deficit had increased ever since the country entered into FTAs with Asean.
  3. India’s net exports to countries without a trade agreement were only marginally lower than its net exports to countries with FTAs.
  4. The imports from countries with trade agreements were substantially higher, pushing India into a trade deficit.


What changed after the signing of these agreements?

India’s imports from Asean countries increased sharply in comparison to its exports to them after signing these agreements.


India’s experience with other FTAs:

India’s past experience with FTAs has not been encouraging.

India had recorded a trade deficit in all major trade agreements other than the South Asia Free Trade Agreement (SAFTA).


Need of the hour:

India needs to work on its manufacturing sector to benefit from any FTA.

India should not consider entering into FTAs without preparing the agriculture and manufacturing sectors adequately.


Sources: Down to earth.