India-ASEAN Trade Relations: Renegotiating AITIGA to Address Trade Imbalance

India and the Association of Southeast Asian Nations (ASEAN) have accelerated the review of the ASEAN-India Trade in Goods Agreement (AITIGA), moving into the final negotiation phase. Originally signed in 2009 and implemented in 2010, the agreement is being overhauled to reflect contemporary economic realities and address long-standing Indian concerns regarding trade asymmetries.

The primary driver for this renegotiation is India's widening trade deficit with the ASEAN bloc, which has grown significantly over the last decade. A key focus of the discussions is the refinement of 'Rules of Origin' (ROO) provisions. India seeks stricter ROO to prevent the 'circumvention' of duties, where goods from third countries—most notably China—are routed through ASEAN nations with minimal value addition to exploit preferential tariff rates. By tightening these rules, India aims to protect its domestic manufacturing sector from unfair competition and dumping.

Beyond regulatory safeguards, the modernized AITIGA is expected to provide a significant boost to Indian exports in high-potential sectors such as chemicals, machinery, and textiles. Improved market access and the removal of non-tariff barriers are essential for Indian industries to integrate effectively into regional value chains. This is particularly crucial following India's 2019 decision to opt out of the Regional Comprehensive Economic Partnership (RCEP); strengthening AITIGA is now the primary vehicle for India’s economic engagement with Southeast Asia.

Strategically, the conclusion of these negotiations is a cornerstone of India’s 'Act East' policy. It signals a shift toward 'reciprocal trade' and 'fair trade' over mere liberalization. As the two regions aim to conclude the review by 2025, the outcome will determine the trajectory of India’s economic footprint in the Indo-Pacific region.