WHY ASEAN PACT DID NOT WORK FOR INDIA

The 47th Association of Southeast Asian Nations (Asean) summit, currently underway, offers India a chance to undertake discussions on the review of the trade pact with the bloc, which hasn't worked in India's Yet, a revised pact hasn't seen the light of day.

- NANDITA VENKATESAN

Against the backdrop of changing US trade policies and demand for concessions in the ongoing trade talks, it has become necessary for India to diversify its export markets.

Asean is one such market, but it will require adjustments in the current trade pact, as well as enhanced competitiveness in exports due to China's strong influence on the 10-member regional bloc.

VARYING BENEFITS

GOODS TRADE between India and Asean has more than doubled to $123.1 billion in 2024-25, from $56.2 billion in 2010-11, on the back of the Asean-India Trade in Goods Agreement (AITGA) that came into effect in 2010. The trade is largely concentrated in five nationsSingapore, Indonesia, Malaysia, Vietnam and Thailand -that accounted for 95% of India's total Asean trade.

This rise in trade, however, has come mainly from Asean nations increasing their exports to India, while India's exports to Asean nations have declined over the years.

During the signing of the pact, it was expected that India would benefit from the lower tariffs and other concessions. But that didn't turn out to be the case.

Between fiscal 2011 and 2024, India's exports grew at a 3% compound annual growth rate (CAGR), while imports rose more than twice as fast, at 7.5% CAGR, expanding India's trade deficit from $5 billion to $45.3 billion in fiscal 2025.

TRADE DYNAMICS

SOME OF the key products exported to Asean (the top five trading partners) in fiscal 2025 include petroproducts, electrical machinery, transport equipment, metals, chemicals and gems and jewellery.