The ASEAN-India Trade in Goods Agreement (the “Agreement”) is a trade deal between the ten member states of ASEAN and India.

ASEAN and India signed the Agreement at the 7th ASEAN Economic Ministers-India Consultations in Bangkok, Thailand in 2009. The Agreement, which came into effect in 2010, is sometimes referred to as the ASEAN-India Free Trade Agreement.

Here, we offer an overview of the Agreement and explain why it may be amended going forward.

The Agreement originated out of the Framework Agreement on Comprehensive Economic Cooperation between India and ASEAN created in 2003. As the title suggests, this framework agreement set the basis for India and ASEAN to negotiate future trade agreements.

The Agreement covers trade in physical goods and products; it does not apply to trade in services. ASEAN and India signed a separate ASEAN-India Trade in Services Agreement in 2014. Along with the ASEAN-India Investment Agreement, the three agreements collectively form the ASEAN-India Free Trade Area.

Once the Agreement came into force in 2010, it established one of the world’s largest free trade areas, covering a combined market of close to 1.8 billion people. Under the Agreement, ASEAN and India have committed to progressively eliminating duties on 76.4 percent of goods and to liberalize tariffs on over 90 percent of goods.

Because of the uneven levels of development and differing economic policies within ASEAN, the Agreement applies two different classes of tariff rates depending on whether or not they are WTO members. Generally speaking, the Agreement grants less developed ASEAN members with less liberalized economies, such as Myanmar and Laos, a longer timeframe to reduce their tariffs.

Tariff reductions on “normal track” products have been completed for Brunei, Indonesia, Malaysia, Singapore, Thailand, the Philippines, and India. The Agreement requires Cambodia, Laos, Myanmar, and Vietnam will have their last “normal track” tariff reductions in place by December 31, 2021.

The Agreement allows the parties to maintain tariffs of four to five percent for some sensitive products. A number of these “sensitive track” products are still in the process of being lowered for Cambodia, Laos, Myanmar, Vietnam, the Philippines, and India. The last tariff reductions for “sensitive track” products are due for Cambodia, Laos, Myanmar, and Vietnam by December 31, 2024.

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This article was first published by AseanBriefing which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in China, Hong Kong, Vietnam, Singapore, India, and Russia. Readers may write to [email protected]

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