22nd India-ASEAN Summit

Syllabus: GS2/IR

Context

• The 22nd Association of Southeast Asian Nations (ASEAN)-India Summit was held in Malaysia.
  • The Philippines set to take over the seat in 2026.

Key Highlights of the Summit

• Reviewed progress in ASEAN-India relations and discussed new initiatives to strengthen the Comprehensive Strategic Partnership.
  • This marked his 12th participation in the India-ASEAN Summit.
• The summit called for the early review of the ASEAN-India Free Trade Agreement (AITIGA).
• In line with the Malaysian Chair’s theme of “Inclusivity and Sustainability,” the Prime Minister announced a series of initiatives to deepen cooperation:
  • implementation of the ASEAN-India Plan of Action (2026–2030), 
  • adoption of the ASEAN-India Joint Leaders’ Statement on Sustainable Tourism, 
  • and designation of 2026 as the “ASEAN-India Year of Maritime Cooperation.” 
  • Holding East Asia Summit Maritime Heritage Festival at Lothal, Gujarat.
• He also proposed organising the Second ASEAN-India Defence Ministers’ Meeting and the Second ASEAN-India Maritime Exercise to promote a secure and open maritime environment.

Brief on India-ASEAN Relations

• Foundation: Cooperation began in the 1990s.
  • Driven by shared economic and strategic interests.
  • Also a response to China’s growing influence in the region.
• Policy Framework: “Look East Policy” initiated in the 1990s, it was transformed into the “Act East Policy” in 2014, marking a more action-oriented approach to deepen ties with ASEAN.
• Milestones in the Partnership:
  • 1992: India became a Sectoral Dialogue Partner.
  • 1996: Elevated to Full Dialogue Partner.
  • 2012: Upgraded to a Strategic Partnership.
  • 2022: Elevated to a Comprehensive Strategic Partnership.
• Trade and investment: India and ASEAN have signed a Free Trade Agreement (FTA), significantly boosting trade and investment.
  • ASEAN is India’s 4th largest trading partner, with total trade reaching US$110.4 billion in 2021-22.
  • Between FY 2009 and FY 2023, India’s imports from ASEAN surged by 234.4 percent, while its exports to the bloc increased by only 130.4 percent. 
  • Consequently, India’s trade deficit with ASEAN widened from US$7.5 billion in 2011 to approximately US$44 billion in 2023. 
• Regional connectivity: India is working to improve connectivity with ASEAN through projects like the India-Myanmar-Thailand (IMT) trilateral highway and the Kaladan Multimodal Transit Transport project.
• Defense and security: Defense ties between India and ASEAN have deepened through joint military exercises such as the ASEAN-India Maritime Exercise and participation in the ASEAN Defense Ministers’ Meeting Plus (ADMM+).
  • India also places ASEAN at the heart of its Indo-Pacific vision for regional security and growth (SAGAR – Security and Growth for All in the Region).
• Socio-cultural cooperation: To strengthen people-to-people connections, India and ASEAN have promoted various cultural exchanges, such as the ASEAN Students Exchange Programme, training courses for ASEAN diplomats, and the ASEAN-India Network of Think Tanks.

India-ASEAN FTA

• The Framework Agreement on Comprehensive Economic Cooperation between ASEAN and India was signed in 2003, establishing the legal foundation for subsequent agreements.
  • These agreements include the trade in goods agreement, trade in services agreement, and investment agreement, which together form the ASEAN-India Free Trade Area (AIFTA).
• The ASEAN-India Trade in Goods Agreement was signed and came into effect in 2010.
  • Under this agreement, ASEAN member states and India committed to gradually open their markets by reducing and eliminating tariffs on 76.4% of goods.
• The ASEAN-India Trade in Services Agreement, signed in 2014, includes provisions on transparency, domestic regulations, market access, national treatment, recognition, and dispute settlement.
• The ASEAN-India Investment Agreement, also signed in 2014, ensures protection of investments, including fair and equitable treatment for investors, non-discriminatory practices in cases of expropriation or nationalization, and guarantees of fair compensation.

Challenges With AIFTA

• Widening Trade Deficit: India’s trade deficit with ASEAN has consistently widened since the FTA. Indian imports from ASEAN grew faster than exports, leading to asymmetrical gains.
• Limited Market Access for Indian Services: The India-ASEAN Trade in Services and Investment Agreements, which came into force in 2015, remain underutilised.
  • Despite India’s strength in services, ASEAN countries offered limited liberalisation in sectors like IT, professional services, and healthcare.
• Non-Tariff Barriers (NTBs): ASEAN members often impose complex standards, licensing requirements, and other regulatory barriers.
  • These nullify tariff concessions and restrict Indian exports, especially in agriculture and pharmaceuticals.
• Rules of Origin Issues: Lax rules of origin enable third countries (like China) to route goods via ASEAN to India, exploiting tariff benefits.
  • This undermines domestic manufacturing under Make in India.
• Limited Gains for Indian Agriculture: Indian agricultural products face high sanitary and phytosanitary standards and quota restrictions.
  • Meanwhile, ASEAN countries export cheap palm oil, rubber, and spices, hurting Indian farmers.
• Negotiation Imbalance: India often faces difficulty in securing reciprocal concessions.
  • ASEAN acts as a bloc, whereas India negotiates alone, leading to less negotiating leverage.

Way Forward

• Non-Tariff Barriers (NTBs): India must push for a transparent mechanism to address NTBs, particularly in sectors like pharmaceuticals and agricultural products.
• Rules of Origin (RoO): Tighter and clearer RoO criteria can prevent circumvention and ensure that genuine ASEAN-India trade flows are promoted. 
• Supply Chain Resilience: India and ASEAN share an interest in reducing overdependence on single-country supply chains, collaborative investment in resilient and diversified supply chains in electronics, semiconductors, and critical minerals could be a win-win.
• Sustainability and Green Growth: Joint ventures in solar energy, electric mobility, and climate-smart agriculture could strengthen the partnership.

Source: TH