India and the 10-member bloc of South-East Asian nations have decided to review their free trade agreement (FTA) in goods that was signed in 2009.
The decision comes at a time when Indian industry’s resistance to any sort of FTA without credible gains for it is on its peak, and a global trade war has threatened to drag down both economic and trade growth. While officials of both the sides will work out details in the coming days, the Indian industry has long complained of getting a raw deal from the Asean FTA.
According to a joint statement, both India and Asean members have decided to constitute a joint committee to reexamine the FTA.
"The ministers agreed to initiate the review of the Asean-India trade in goods agreement to make it more user-friendly, simple, and trade facilitative for businesses," it said. This was decided at a meeting between economic ministers of Asean and commerce and industry minister Piyush Goyal in Bangkok on Tuesday.
In their meetings with Goyal late July, several industries, including steel, pharma, textiles and electronics, criticised India’s trade agreements with Asean, Japan and South Korea in the past decade on grounds that the country's trade deficit with these nations just widened after these pacts had come into force and there was only limited gains for them. If, on top of this, a free trade agreement with China is effected through the 16-nation RCEP (of which Beijing is a key member), cheap Chinese products will flood our market.
The bilateral trade between India and Asean rose to $80.8 billion in 2018 from $73.6 billion a year before.
Both India and Asean members agreed to further promote potential of bilateral trade through the utilisation of the free trade pact as well as cooperation in some areas like financial technology, connectivity, start-ups and innovation, as per the statement.