Commerce and industry minister Piyush Goyal on Thursday said that it was “silly” on India’s part to sign free trade agreements with Association of Southeast Nations (Asean) and other developing countries that are its direct competitors. Some of them over time become conduits of Chinese products, he remarked.
“Many of whom (developing countries with which India entered into FTAs) have now become the B team of China. So effectively, I have opened up my markets for goods that find their way from China into India,” he said at the Future Frontiers Forum in London.
This is the most candid statement from a senior NDA government functionary, denouncing the FTA with Asean, although the widening of India’s trade deficit with the bloc after the pact has often been highlighted, including in academic circles.
The Asean-India Trade in Goods Agreement (AITIGA) became operational in 2010, during the regime of UPA-II government. Since then, India’s trade deficit with Asean widened from $4.98 billion in 2010-11, the first full year of operation of AITIGA to $44.20 billion in 2024-25. India’s exports to the region fell 5.77% on-year in 2024-25 to $38.96 billion while imports grew 5.65% to $84.16 billion.
Asean includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.
Within five years of the agreement on goods being activated, India had started asking for a review of the pact as its imports from Asean zoomed but it could not derive the expected benefits. India maintains that its exports to Asean have been impeded by non-reciprocity in FTA concessions, non-tariff barriers, import regulations and quotas. Another Indian demand is strict adherence to Rules of Origin provisions of the agreement by Asean.
The review of the AITIGA is under progress and both sides have committed to complete the process by the end of this year. Along with the Asean FTA, the review of trade agreements with South Korea and Japan is also in the process.
The minister said the focus of India has changed to entering into “robust trade agreements with the developed world as we did with Australia, and are now negotiating with New Zealand in another 3-4 months.
The agreement with the United Arab Emirates (UAE) is already in place and now “we are now close to closing second in the Gulf region. Trade agreements with more countries in the Gulf region are possible. “The rich countries.” The second FTA in West Asia that is nearing completion is with Oman.
“What we did with the UK and four European Free Trade Association (EFTA) countries and are in active dialogue with the EU. We are in dialogue with the USA, we are in dialogue with Peru and Chile. Countries against whom we do not compete but complement. Where they have certain things to offer that India will love to have and we have certain things on offer which do not hurt their economies,” Goyal added.
He said looking at India’s current contribution to global trade there is a huge opportunity to grow in the future and for that quality and scale are being focussed on.