ASEAN-India Free Trade Agreement: Need for a Review
In the 2019 fiscal year, India's merchandise exports to the Association of Southeast Asian Nations (Asean) grew at a compound annual growth rate of about 5 percent to reach a total of $103 billion. Its imports from the region also increased at a similar rate. As the pandemic hits home, India and ASEAN are looking at ways to collaborate in the production of generic drugs and medical technology. The government has clarified that its flagship program, Atmanirbhar Bharat, does not seek to safeguard the interests of investors and trade. Instead, it is aimed at accelerating the growth of Indian industry. India is the largest producer of generic medicines globally. It has a 20 percent share in the global supply of these drugs and provides over 60 percent of the vaccine demand. India is also home to the world's largest pharmaceutical industry and the fourth-largest medical device industry.
As part of its efforts to provide relief to the victims of the pandemic, India had also provided medical assistance to over 150 countries and grants-in-aid to over 80 others. While India is not alone in its concerns, it is the largest single buyer in the Southeast Asian market. Its concerns are often overshadowed by the region's other major economies, which have been reluctant to give up their competitive advantage. The AIFTA framework requires that at least 35 percent of a country's total value be added to India's free trade area (FTA). However, despite this, China-based manufacturers can still benefit from the relaxation of duties through a third country.
The 18th India-ASEAN Summit was held on October 28. It was followed by the East Asian Summit and the Summit of the Association of Southeast Asian Nations. The Summit is focused on the Indo-Pacific. It also created pressure on the various mechanisms of Indo-ASEAN cooperation, which included the establishment of joint working groups and other related activities. The main emphasis was placed on the sturdy nature of the partnership. The goal of the dialogue between India and the Association of Southeast Asian Nations remains the strengthening of this partnership.
As part of its efforts to address the pandemic and the post-pandemic recovery, India has been working with the Association of Southeast Asian Nations to support their efforts. They would also benefit greatly from the Quad vaccine initiative. The free trade agreement between India and the Association of Southeast Asian Nations (ASEAN) is of critical importance to the partnership. This is evidenced by the recent review of the AITIGA. Since India is not in the RCEP, the FTA should be updated to reflect the changes in the regional trading system. India-ASEAN trade has been declining for the last 3 years. In the first half of 2021, it only has a $42 billion surplus. The reordering of the FTA and its better utilisation could lead to an expansion of Indian exports. Expansion of education, joint efforts in green economies, and start-ups should be the ideas pursued by the two countries to expand their partnership. Nalanda University would welcome a collaboration with other organizations. There are already adequate fora and meetings to be held in the near future. As for the Indian contribution to the ASEAN, it is expected that the member states would contribute to the development programs of the region. Projects involving India and the Association of Southeast Asian Nations (ASEAN) need closer attention
The India-ASEAN Summit is focused on the Indo-Pacific. Prime Minister Narendra Modi noted the special role of the Association in India’s Act East Policy and in the region’s growth and development. As part of the vision for the Indo-Pacific, the Summit has also highlighted the need for mutual cooperation and dialogue among the various regions. The Quad documents are the framework for the comprehensive cooperation and vision of the Indo-Pacific region. They are also the reason why India was chosen as a central component of the Quad. A joint statement on the Alliance for Open and Sustainable Peace was adopted. It builds on and reaffirms the centrality of the various aspects of the Delhi Declaration. The statement aims to identify four areas of cooperation under the Agenda for Open Industries (AOIP). These include the Maritime Cooperation, Economic Cooperation, Climate Change, and Human Capital Development. The ISA is not mentioned in these areas. The CDRI is not associated with any ASEAN member. India’s support to the CLMV countries has helped narrow the development gaps within the region. The concept of partnership is very important in addressing the challenges of addressing the continent’s development needs.
India has played its role in bridging the development gaps within the Association of Southeast Asian Nations. It extended its support to the CLMV members. India’s support for the Association of Southeast Asian Nations’ (ASEAN) cultural heritage list is a step toward building a stronger collaboration on this issue. India has been contributing to the restoration of several temples in Thailand, including those in Siem Reap and Yogyakarta, which could have significant cultural and historical importance. The partnership between India and the Association of Southeast Asian Nations has shared values and ideas. This partnership needs more robust collaboration.
In order to boost Indian exports, the commerce minister Piyush Goyal has called for a renegotiation of the India-ASEAN free trade agreement. And demanded removal of various non-tariff barriers. This has resulted in the retaliatory actions of other countries, such as India, which will affect the long-term interests of our leaders. The goal was to prevent the abuse of rules by third parties outside the region. Both sides also needed to remove non-tariff barriers. Through the comprehensive review of the agreements between India and the Association of Southeast Asian Nations, it is hoped that the country will be able to benefit from the region's robust growth in imports and export.
India's bilateral trade with the Association of Southeast Asian Nations could grow to $200 billion, from around $80 billion now. To achieve this, the two sides should start working on a comprehensive trade pact review, which could take several years. The goal of the review is to ensure that the free flow of goods and services across the region’s borders is ensured. In 2020, India remained one of the largest trading partners of the Association of Southeast Asian Nations. With a growing economy and a flourishing ASEAN, India is looking to improve its cooperation with the region in various areas such as information technology, healthcare, and industrial 4.0. With a combination of our strength, India can make a golden chapter in the development of the world.
Pic Courtsey-Ian Taylor at unsplash.com
(the views expressed are those of the author and do not represent views of CESCUBE.)
