RStv Big picture notes India-ASEAN FTA

Topic: India-ASEAN FTA review

India and the 10-member ASEAN have agreed to initiate a review of the bilateral free trade agreement (FTA) in goods to make it “more user-friendly, simple and trade facilitative”.
India is not happy about the fact that its trade deficit with ASEAN has widened significantly since the pact was implemented in January 2010.
A NITI Aayog study reveals that India’s trade deficit with ASEAN doubled to $10 billion in 2017 from $5 billion in 2011.
A review of the India-ASEAN FTA would make the pact simpler and more user-friendly.
In the joint statement, the ministers of both sides welcomed the recommendations of the ASEAN-India Business Council to further promote the potential of bilateral trade through the utilisation of the ASEAN-India FTA as well as furthering cooperation in some areas of mutual interest, such as financial technology, connectivity, start-ups and innovation, empowerment of youth, and women and MSME development.

Trade relation between India and ASEAN is at all time high and has already crossed 80 billion mark
However the burgeoning trade deficit is a major concern for India, as ASEAN imports to India is growing at 14% while Indian export to ASEAN is growing at 9-10%
The existing FTA agreement was not unfair to India per se,but ASEAN utilized it better.
RCEP a bigger FTA grouping agreement currently under negotiations will eventually superimpose the existing India ASEAN FTA
India has to be extra cautious and learn from its past FTA experiences while negotiating RCEP.

ASEAN has more items in negative list(excluded goods) than India ,there are also certain non tariff barriers in ASEAN countries
The present FTA does not facilitate easier movement of service professionals.
Uneven relationship exists as ,ASEAN countries predominantly export oriented utilised FTA with India better than India
Despite the lack of an exit or review clause in the present FTA,the proposal to review and make the FTA user friendly by ASEAN is a welcome move.
India always wanted for Free and Fair trade just like any other country would, outcome of the review process will reflect slowly but the prospect of review itself is a welcome sign

Asian region has become growth engine of world, intra regional among asian countries is always desirable
Trade war between China and the USA is a perfect time for other asian countries to capitalize on their advantages.
A good India-ASEAN Trade will counter Chinese heft in the region , especially in two ways
By Increasing the land based trade along the India -Myanmar border ,chinese sponsored terror groups operating in that region can be mitigated.
By increasing maritime trade,India can ensure maritime security for smaller ASEAN neighbours
India must utilize BIMSTEC grouping effectively, as it has the potential to act as a bridge between ASEAN and SAARC

India must address its weakness when it comes to FTA

Trade deficit arises mainly due to Non tariff barriers,the government must help Indian exporters in dealing with such barriers .
India must resolve its internal economic dynamics with respect to land and labor laws,that's the only way India can attract investments and stay competitive.
India must try to put in any future FTA agreement its advantageous areas such as ICT,Tourism,Higher education and cultural aspects.
While competitive prices and efficiency is a long term issue that needs to be addressed,Communication and Connectivity is the immediate area India needs to focus.
Expediting the road and rail connectivity projects in North East is essential to realize the full potential of regional trade .