NEW DELHI (Reuters): India and the 10-member Association of Southeast Asian Nations (ASEAN) have agreed to review their decade-old free trade pact, they said on Tuesday, as India’s deepening trade deficit prompts local industries to demand changes to trading arrangements.
Their joint statement, issued after a trade ministers’ meeting in Bangkok, did not spell out any details of the review but said it aimed to make the agreement more “user-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, which groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
A panel of officials from India and ASEAN countries will work on the “details of the review and submit an update” at the next meeting, the statement said.
India’s trade minister Piyush Goyal said in a tweet that the review will “help protect the interests of our industry & farmers, create jobs & boost ‘Make in India’”.
India’s trade deficit with ASEAN nations widened to $ 12.9 billion in 2017-18, from about $ 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 $ 80.8 billion in 2018 from the previous year, while foreign direct investment inflows to India from ASEAN members rose to $ 16.48 billion, nearly 37% of total inflows.