Free Trade agreements (FTAs) are signed between nations to promote ease of trade and investment by removing restrictions such as tariffs, import quotas, and export limits. India has been actively engaging with other countries to enhance international trade relations and has signed thirteen FTAs with its till date.
Association of Southeast Asian Nations (ASEAN) region is one of the focus regions for India. India and the ASEAN nations have many similarities in terms of their culture and religion. The region is in close proximity to India especially with North East part of India. Trade and investment ties have also grown during last decade owing to India’s Act East Policy. Merchandise trade between India and ASEAN countries rose to $ 110.40 Bn during the period 2021-22. There have been a few key agreements that have been linked to this boost in India-ASEAN trade relations.
India ASEAN Comprehensive Economic Cooperation Agreement (CECA) - Trade in Goods, Services, and Investment Agreement (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam).
Since trade and investment are priority areas of economic cooperation between ASEAN and India, the ASEAN-India Trade in Goods Agreement (AITIGA), implemented in January 2010, has continually been at the forefront of engagement. In accordance with the Agreement, ASEAN Member States and India have agreed to open their respective markets by progressively reducing and eliminating duties on 76.4 per cent of goods and liberalising tariffs on over 90 per cent of goods. Since AITIGA was put into effect, merchandise trade between ASEAN and India has increased significantly, with increase in exports by 23 per cent and imports by 55 per cent over the past decade. Imports have increased particularly from Cambodia, Singapore, and Vietnam. To ensure balance of trade between the regions, discussions are ongoing.
India Singapore Comprehensive Economic Cooperation Agreement (CECA)
India witnessed a remarkable increase in bilateral trade since the signing of the free trade agreement with Singapore in 2005. To ensure balanced trade, the two countries also agreed to expand tariff concessions for an additional 30 products, liberalizing the rule of origin for exports, rationalizing Product Specific Rules, and including provisions on Certificate of Origin.
India Malaysia Comprehensive Economic Cooperation Agreement (MICECA)
The MICECA was signed between India and Malaysia in 2011. The agreement includes concessions and reductions in tariff for trading certain goods, services, investments, and movement of natural persons. Despite the COVID-19 pandemic, Malaysia and India maintained their strong bilateral trade relations. The total trade, in fact, expanded by 26 per cent in 2021. India’s imports from Malaysia have increased by $ 5.9 Bn and exports have increased by $ 3.12 Bn. With bilateral trade agreement in place, Malaysian companies dealing with palm oil and palm oil products have also benefitted significantly owing to reduction in import duties.
India Thailand FTA - Early Harvest Scheme (EHS)
India and Thailand have implemented Early Harvest Scheme (EHS) in 2006 in order to identify specific products for tariff reduction during the ongoing negotiations on the Free Trade Agreement. This is considered to be the initial phase of the proposed comprehensive FTA. and serves largely as a measure to increase confidence between the two nations. Under Early Harvest Program, tariff reductions have been proposed to be nil for 82 products including fruits, processed food, gems and jewellery, iron and steel, auto parts and electronic goods. The countries have been negotiating the terms with provisions to improve benefits from ASEAN-India FTA.