India and ASEAN signed the a Trade in Goods Agreement on August 13, 2009 based on the India-ASEAN CECA inked between the two sides on October 8, 2003. The new trade pact, which came to effect from January 1, 2010 – after six long years of negotiation – was initially hailed by our economy watchers, but the enthusiasm gradually began to fade away with India’s trade deficit with the 10-member regional bloc increasing fast.

Our exports to ASEAN increased from $23 billion in 2010 to $37.47 billion in 2018-19, but the country’s imports increased from $30 billion to $59.32 billion in the same period. This gap increased further during the last few years, with latest figures showing total bilateral trade increasing 2.3 times to $131.6 billion and trade deficit standing 8.7 times higher at 43.6 billion in 2022-23 from 5 billion in 2010-11. This situation is a concern.

Last week, ASEAN agreed to India’s long-pending demand for a review of the existing trade pact for goods, with the objective of addressing the existing trade imbalances and disparities between the two sides. The process of revisiting the agreement had begun in 2009, with the formation of a joint committee, and the reviewed pact will now be forwarded to the India-ASEAN Leaders’ Summit, scheduled to take place next month.

Meanwhile, in another positive development, India and the US are now trying to discuss ways to end their dispute at the WTO over poultry products. Interestingly, the two countries mutually resolved six trade disputes last month. Prime Minister Modi, during his US visit in June, stressed the need of integrating the two economies and enhancing bilateral trade and investment. It seems the latest development is a step forward in this direction.