E-commerce and Industry Minister Piyush Goyal will undertake a high-level review of the India-ASEAN Free Trade Agreement (FTA) talks during his visit to Laos. This will be a crucial meeting in the backdrop of India and ASEAN working to strengthen economic relations. Given the fast-evolving regional trade environment, these discussions are focused on expanding bilateral economic cooperation between India and the ten ASEAN Member states.
The research paper will discuss the genesis of the India-ASEAN trade pact, why it is important to both sides, what is on the table when Goyal visits Laos, and what to expect from this meeting.
India-ASEAN Trade Pact Background
The India-ASEAN Free Trade Agreement (AIFTA), which entered into force in 2010, has a comprehensive scope for a Free Trade Area (FTA) in goods as well as services and investments. The agreement has been essential to the ramp-up in trade between India and the ASEAN countries — Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines Singapore, Thailand, and Vietnam.
This convergence is also highly valuable in terms of India’s strategic location and ASEAN’s economic dynamism. During the outreach, it was reported that the ASEAN bloc is India’s 4th largest trading partner and the total trade had reached USD 110 billion in 2022. Nonetheless, both parties have deemed it fit to re-visit and beef up the agreement to fall in line with today’s challenges and opportunities of trade.
The COVID-19 global supply chain disruptions and economic hardships since then forced both India as well as the ASEAN nations to look at trade policies afresh. The regional partnership is being promoted as a key measure of support for economic resurgence. Against this backdrop, the visit of Mr Goyal is likely to bring in fresh dynamism in the ongoing negotiations. Piyush Goyal to visit Laos; to discuss progress made on India-ASEAN FTA
Goyal Review Holds Great Significance in Lao PDR —
Piyush Goyal to visit Laos; to discuss progress made on India-ASEAN FTA. Minister Piyush Goyal’s upcoming review meeting of the India-ASEAN trade pact in Laos is important for more reasons than one:
Updating the FTA: A key goal of this review is to bring the current trade agreement forward into a more modern era. For example, tariff barriers, non-tariff measures, and rules of origin have been thorny issues in the trade partnership between India and ASEAN that need to be resolved.
Improving Market Access: For instance, India is looking for greater entry of its goods and services in the ASEAN markets and ASEAN countries would like the benefits of an open Indian market. The review will concentrate on the means to improve market access, especially in the core areas of textiles and clothing, pharmaceuticals, agriculture, electronics, and automobiles.
De-Risk Regional Supply Chains: The current crisis will accelerate the need to strengthen regional supply chains and de-risk global supply routes of trade, especially with disruptions caused due to geopolitical stifles. In Laos, Goyal’s engagements are likely to focus on collaboration between India and ASEAN in co-creating supply chains, particularly in emerging segments such as renewable energy, green technologies, and digital services.
Investment Opportunities: Encouraging investment flows between India and ASEAN is also one of the vital objectives of the discussions, besides trade. As Indian companies seek to grow their base in Southeast Asia, ASEAN firms are also considering the potential business opportunities that India has to offer, especially with the rapid growth of its infrastructure and digital sectors.
Strategic Alignment: India and ASEAN both have a strategic interest in peace and stability within the Indo-Pacific region. This could mean that the bilateral FTA review is expanded to include regional issues, such as connectivity, maritime security, and Sustainable Development Goals (SDGs), allowing economic objectives to be aligned with a broader perspective on geopolitics. Piyush Goyal to visit Laos; to discuss progress made on the India-ASEAN FTA
What Can Result from the Meeting
Here are the likely outcomes of the above review as Minister Goyal is on parleys with ASEAN officials in Laos:
India-ASEAN FTA Review: A possible big takeaway from the summit will be a decision to reconsider and improve upon the terms of India-ASEAN FTA. It can include scaling back on tariffs, reforms in regulations, and steps to facilitate customs procedures and decrease non-tariff barriers.
As mentioned earlier, there may be a discussion of individual sector-specific agreements in areas such as manufacturing, agriculture, and digital trade. first, we may see greater Indian imports of Thai electronics and processed foods or—conversely—larger ASEAN markets for Indian pharmaceuticals.
Digital Economy:The review is taking place at a time when the Indian and ASEAN economies are rapidly digitizing their industries and transactions, this could lead to new transformations, Strengthening Digital Economy Collaboration. This might result in enhancing the possible collaboration in the digital economy, especially through e-commerce, data sharing, and Fintech sectors. That could open the doors to cross-border trade and investment in technology-enabled industries.
Green Growth Imperative: India also has obligations under the climate change agreements and so do ASEAN countries, on which both India and ASEAN may focus within the ambit of FTA in promoting Green Technologies and sustainable practices. This could result in greater collaboration in fields such as renewable energy, sustainable industries, and environmentally-friendly infrastructure.
Greater Connectivity: The discussions in Laos could also result in pacts to enhance physical and digital connections between ASEAN and India. Increased connectivity in areas such as infrastructure development, air and sea transport, logistics, etc. would further aid in a better flow of trade.
Enhancing People-to-People Links: The India-ASEAN relationship goes beyond trade and is underpinned by culture and history. Subsequently, the review meeting may foster tourism and educational and cultural exchanges between both regions. Piyush Goyal to visit Laos; to discuss progress made on the India-ASEAN FTA
In conclusion
In a turbulent world of collapsing global supply chains, Piyush Goyal is to review the India-ASEAN trade pact in Laos Further, as both India and ASEAN are keen to explore the markets of each other and deepen their trade relations with larger investment, the talks are likely to be fruitful. To unlock new avenues of growth and accelerate regional economic cooperation as well as to make supply chains more resilient in the post-pandemic world, revamping and updating the existing FTA would be necessary.
These negotiations will not only influence trade but also reinforce the strategic partnership between India and ASEAN, especially in the backdrop of the changing geopolitical spectrum of the Indo-Pacific. Given India’s renewed focus on its Act East policy, the outcome of these negotiations will be keenly watched by industry captains and policymakers. Piyush Goyal to visit Laos; to discuss progress made on the India-ASEAN FTA
Piyush Goyal to visit Laos; to discuss progress made on India-ASEAN FTA. This is a developing story, so for the latest updates and other international trade news, like Newsopoint48: A 360° News Hub on Newspoint48website.
