ASEAN-India Trade Relations

Formal negotiations for the ASEAN-India Free Trade Agreement (AIFTA) in Services and Investment were concluded under India’s then ruling United Progressive Alliance government in 2012, and endorsed by ASEAN economic ministers in 2013. The agreement has faced considerable opposition within ASEAN with Thailand, Indonesia and the Philippines yet to individually ratify the deal.

The sticking point with these countries was the stipulation that Indian companies be allowed to hold at least a 51% majority stake in multi-brand retail foreign direct investment projects involving ASEAN member nations. This number has since been reduced to 49% in hopes of re-engaging the holdout nations.

The ASEAN-India Services and Investment Agreement is built on the foundation of the AIFTA in Goods, which came into effect in 2010 and liberalised tariffs on over 90% of items. The services and investment agreement is envisioned as a means to bolster cross-border investments and facilitate the flow of professionals and highly skilled workers between India and ASEAN.

Post implementation of the AIFTA in Goods, total trade between the nations has increased by more than 35% to US$79 billion in 2012, surpassing the initial trade target of US$70 billion. India and the ASEAN nations have responded by adjusting their bilateral trade targets to US$100 billion by 2015, and US$200 billion by 2022.