India-ASEAN Trade Agreement Review

Overview

The India-ASEAN Trade Agreement is a significant trade pact between India and the Association of Southeast Asian Nations (ASEAN). It aims to promote economic cooperation and reduce trade barriers between the two regions. Recently, there have been some noteworthy developments regarding the review of this agreement.

India and ASEAN are expected to formally launch the review exercise for the free trade agreement (FTA) in November. The review process will focus on eliminating barriers and addressing concerns about the misuse of the trade pact. The negotiations are expected to be concluded by 2025. This review is crucial as it aims to enhance and diversify trade while addressing the current irregularity in bilateral trade.

India’s trade deficit with ASEAN has been a matter of concern, and this review aims to address this issue. The widening trade deficit between India and ASEAN has raised questions about the effectiveness of the existing trade agreement. The review will also focus on issues such as implementation, rules of origin, customs procedures, further liberalization of trade in goods, and sharing and exchange of trade data.

The review process will involve multiple rounds of talks between India and ASEAN. The first round of talks is expected to start in November. Both sides will deliberate on various aspects of the agreement and work towards finding solutions that benefit both parties. The goal is to create a more balanced and mutually beneficial trading relationship.

The India-ASEAN Trade Agreement has been instrumental in promoting bilateral trade between India and ASEAN member countries. In recent years, bilateral trade has witnessed significant growth. In FY23 alone, bilateral trade between India and ASEAN reached $131.5 billion. However, challenges such as non-tariff barriers and the widening trade deficit need to be addressed to unlock the full potential of this partnership.

The review process will provide an opportunity to identify areas where improvements can be made. It will also help in addressing concerns raised by businesses regarding the misuse of the trade pact. By eliminating barriers and enhancing cooperation, both India and ASEAN can create a more conducive environment for trade and investment.

In conclusion, the review of the India-ASEAN Trade Agreement marks an important milestone in the economic relationship between India and ASEAN. The review process aims to address concerns about barriers and misuse of the trade pact while enhancing bilateral trade. It presents an opportunity for both regions to strengthen economic ties, boost trade, and explore new avenues for collaboration. As negotiations progress over the coming years, it will be interesting to see how this review shapes the future of India-ASEAN economic relations.

What are the benefits for the plastic industry?

The India-ASEAN Trade Agreement has several benefits for the plastics industry in both India and ASEAN member countries. Here are some key advantages.

1. Market Access: The agreement provides improved market access for the plastics industry by reducing or eliminating tariffs on plastics and plastic products traded between India and ASEAN member countries. This helps in expanding business opportunities and increasing exports for the plastics industry.
2. Diversification of Suppliers: The agreement allows the plastics industry to diversify its supply chain by accessing raw materials, machinery, and technology from ASEAN member countries at competitive prices. This promotes innovation, enhances product quality, and reduces production costs.
3. Collaboration and Technology Transfer: The agreement encourages collaboration and technology transfer between the plastics industries of India and ASEAN member countries. This facilitates the exchange of knowledge, expertise, and best practices, leading to mutual growth and development.
4. Harmonization of Standards: The agreement promotes the harmonization of standards and regulations related to the plastics industry. This simplifies trade procedures, reduces non-tariff barriers, and ensures compliance with international quality standards.
5. Access to a Larger Consumer Base: The agreement provides access to a larger consumer base for the plastics industry by facilitating trade with ASEAN member countries. With a combined population of over 650 million people, ASEAN offers significant market potential for Indian plastic manufacturers.
6. Sustainable Development: The agreement emphasizes sustainable development in the plastics industry by promoting environmentally friendly practices, waste management, and recycling. This contributes to the circular economy and helps in reducing plastic pollution.

What are the challenges for the plastic industry?

The India-ASEAN Trade Agreement has several benefits for the plastics industry in both India and ASEAN member countries. However, there are also some challenges that need to be addressed. Here are some of the key challenges:

1. Non-Tariff Barriers: Non-tariff barriers such as technical regulations, standards, and certification requirements can pose a significant challenge for the plastics industry. These barriers can make it difficult for businesses to trade with each other and can increase the cost of goods for consumers.
2. Intellectual Property Rights: Intellectual property rights (IPR) protection is a major concern for the plastics industry. The lack of adequate IPR protection can discourage innovation and investment in the industry.
3. Competition from China: The plastics industry in India and ASEAN member countries faces stiff competition from China. China has a dominant position in the global plastics market and has been able to offer products at lower prices due to economies of scale.
4. Environmental Concerns: The plastics industry is often associated with environmental concerns such as plastic pollution and waste management. The increasing focus on sustainability and environmental protection can pose a challenge for the plastics industry.
5. Regulatory Compliance: Regulatory compliance is another challenge that businesses in the plastics industry face. Compliance with regulations related to product safety, environmental protection, and labor standards can be time-consuming and expensive.

How to overcome the challenges?

1. FTA Benchmarking: It is a tool that enables importers and exporters to receive preferential treatment on customs duties under various Free Trade Agreements (FTAs). It also allows businesses to maximize the benefits of FTAs, prioritize target markets, analyze the competitive landscape, and optimize supply chains. We provide FTA Benchmarking services that help businesses get the most out of any FTA. They conduct a basic level of due diligence before importing goods and confirm that the goods meet the prescribed originating criteria. This will support businesses in correctly determining the country of origin, properly claiming the concessional duty, and assisting customs authorities in ensuring the smooth clearance of imports.
2. Non Tariff Measures: They have a significant impact on international trade, affecting market access, compliance, risk management, and competitiveness. We help businesses understand and navigate NTMs to facilitate trade, meet regulatory requirements, protect consumers, and seize market opportunities. By addressing Non Tariff Measures effectively, businesses can enhance their trade performance and ensure sustainable growth in a globalized marketplace.

I hope this article helped you to get insights about the India-ASEAN Trade Agreement Review so that you can decide your business (import-export) strategy in a more dynamic and effective manner.

If you have any questions or comments, please do not hesitate to approach me!