Indian-ASEAN Free Trade Agreement Challenges & Opportunities

Implementation of the Free Trade Agreement (FTA) with Association of South East Asian Nations (ASEAN) from 1st January 2010, India has achieved an important milestone in pursuance of its objective to expand its economic and political relationship with the neighbouring nations. ASEAN consists of 10 countries namely Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. The ASEAN-India FTA (AIFTA) is considered a major step of India into the formidable regional trade block of South Asia. According to the Federation of Indian Chambers of Commerce and Industry (FICCI), the pact is a win-win for both as the increased market access would result in doubling of the bilateral trade from about $50 billion in 2010 to $100 billion by 2015. India exporters would be able to source products at competitive prices in sectors such as machinery and machine parts, steel, agricultural products, auto components, chemicals and synthetic textiles. On the other hand, ASEAN would gain access to the Indian market for its non-agricultural products. Under the FTA, tariffs on over 80 per cent (4000 product lines) of the goods traded between the two regions are proposed to be completely withdrawn by 2016.