India ASEAN Free Trade Agreement: Prospects for Growth or a Hasty deal?

This blog discusses the India ASEAN Free Trade Agreement and its impact on trade flow and economic ties between the countries. It explores the prospects for growth and potential drawbacks of the agreement.

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Blog 2: International Trade Concept
“India ASEAN Free Trade Agreement: Prospects for Growth or a Hasty deal?”
Past several years, bilateral and regional trading arrangement has been looked as permanent
feature for the global trading architecture. The country India has started actively engaging in the
regional and bilateral trade negotiation to diversify the market and increase export as well. The
Free Trade Agreement present with the country provides open market to export in India. This
type of agreement also provide scope of cost reduction through economies of scale in the
environment, providing raw material to manufacturing companies and other products from
partner companies as well. It was analysed that by initiating the free trade agreement in the
environment, the country gained the advantage to reduce the trade deficit present with them
through past several years. The ASEAN – India Free Trade Agreement is trade area among the
ten member states of Association of Southeast Asian Nations with India. This framework became
effective in the year 2010. This type of agreement initiated a mutual interest between both the
parties to expand the scope of their economic ties in the Asia-Pacific region. Further, the fact
should be noted that this trading agreement along with various other trading agreements helped
the country to become close to each other and initiate effective trade agreement for both the
countries. This type of agreement helps the countries in procuring raw material and resources
from different parts of the world without facing excessive obligations and high rate of taxes. This
agreement has enhanced the trade flow between two countries. In case of analysing the trade
agreements between the countries present in the worldwide market, India ranked second with 28
Free Trade Agreements initiated by the country in a year (PHD Chamber 2019).
This type of agreement gave rise to globalization, liberalization and harmony among countries.
Negotiation of bilateral agreement will foster the development in India but it will also lead to
expansion of infrastructure in the country. Increasing import as well as export helps the countries
to deliver adequate resources to the communities and grow together. This type of agreement also
helps the countries trade more with nations and aligns their activities with them in order to grow.
One of the barriers in implementing effective Free Trade Agreement process is lack of
information about FTA. Parties do not know about the FTA programme initiated by the country
to increase the satisfaction in the environment. In response to which various promotional
strategies have been implemented for the same. Thus, it should be noted that with the help of this

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type of strategy, India has started growing its manufacturing unit and engaging its products on
global level. Positive trade relationship has started giving support to the country in various
political matters as well.

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References
PHD Chamber., (2019) India’s Trade Agreement [online]. Available from <
http://phdcci.in/image/data/Research%20Bureau-2014/Economic%20Developments/Economic-
2018/March/Report%20on%20India.pdf > [Accessed on 2 April 2019].