The Commerce Department, with the help of the Indian industry, is trying to precisely identify items where it can gain from tariff cuts by the ASEAN countries, as it prepares for the review of the ASEAN-India Free Trade Agreement (FTA) beginning next month. India hopes to bridge the growing trade imbalance against the country by gaining greater market access in various sectors.

“The Commerce Department has circulated to various industry bodies a country-wise list of tariff lines for all ten ASEAN countries on which either concessions given under the existing FTA are minimal or excluded. Based on feedback from the industry, the negotiating team will shortlist the items and firm up its negotiating position. It wants to be precise in its demand,” a source tracking the matter told businessline.

The ASEAN-India FTA, formally known as the ASEAN-India Trade in Goods Agreement (AITGA), which was implemented fourteen years back in January 2010, resulted in disproportionate gains for the ASEAN industry.

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Trade deficit

In 2022-23, India exported goods worth $44 billion to the region while its imports were valued at $87.57 billion. Trade deficit in 2022-23 was $43.75 billion compared to $7.5 billion during the implementation of the agreement.

India is hopeful that the long-pending review of the pact, to be initiated in New Delhi on February 18-19, will help in reducing some of the deficit with the ASEAN by addressing both tariff and non-tariff barriers.

“Under the AITGA, both sides agreed to progressively eliminate duties on about 75 per cent of goods and reduce tariffs on around 15 per cent of goods, but the tariff elimination commitment made by the ten ASEAN nations varied considerably. While an open economy like Singapore committed to almost 100 per cent elimination, countries like Indonesia and Vietnam offered much less,” the source said. 

The 10-member ASEAN, which includes Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar and Cambodia.

Scope for tariff cuts

“There are various sectors where there is a scope for more tariff cuts in individual ASEAN, which include chemicals, metals and alloys, machinery, plastic & rubber, textiles, leather and gems & jewellery. The Indian industry has to go through the tariff list and point out exactly where they believe that they are competitive and can gain from tariff cuts,” the source said. 

While the government had started collecting inputs from the industry, on both tariffs and non-tariff barriers, from late last year, it is now attempting to help the industry get more focussed so that precise demands can be made.

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