India and the 10-member Association of Southeast Asian Nations (ASEAN) have agreed to review their decade-old free trade pact. The decision was announced in a joint statement issued at the end of a trade ministers’ meeting in Bangkok. The statement, however, did not provide details the of the review. But it said the move was aimed at making the agreement more use-friendly and simple.
Hit by cheaper imports, small- and medium-scale industries in India, such as textile manufacturers and small farmers, have demanded the government take a fresh look at trade with ASEAN. The statement said officials from India and ASEAN countries will work on the details of the review and submit an update at the next meeting.
India’s trade minister Piyush Goyal said in a tweet that the review will help protect the interests of the country’s industry and farmers, create jobs and boost Make in India. India’s trade deficit with ASEAN nations widened to US$12.9 billion in 2017-18, from about US$5 billion seven years ago.
The free trade pact, which initially excluded software and information technology, was signed in 2009 after more than six years of negotiations. A powerful nationalist group tied to Prime Narendra Modi, which has long opposed a China-backed Asia-Pacific trade pact due to India’s trade deficit with ASEAN, said a review would “help in going towards a more equitable and balanced trade”.
The ministers also agreed to speed up the process of ratification of an ASEAN-India trade services agreement signed last year, the statement said. The goods trade between India and ASEAN grew 9.8% to US$80.8 billion in 2018 from the previous year, while foreign direct investment inflows to India from ASEAN members rose to US$16.48 billion, nearly 37% of total inflows.