As India grapples with an influx of cheap imports believed to be routed through ASEAN countries, authorities are considering a revision of the free trade agreements that facilitate these imports to protect domestic industries.
India is set to revisit its Free Trade Agreement (FTA) with ASEAN, including Indonesia and Singapore, due to concerns over cheap imports flooding the market, believed to be sourced from Chinese investments in the region. This review comes as local businesses struggle against the competition from lower-priced goods.
The review aims to balance India’s strategic relations with ASEAN while addressing domestic economic impacts from the flood of inexpensive imports, primarily from China’s regional investments.
Bilateral trade between India and ASEAN stood at $122.67 billion last financial year, but there is growing concern in India that the benefits are skewed towards ASEAN, a robust manufacturing hub.
Scheduled talks in Jakarta between India and ASEAN from July 29-31, 2024, will test India’s ability to negotiate terms that better protect its domestic industries while maintaining healthy international relations.
Experts suggest India may need to selectively adjust tariffs on specific imports like mobile phones and auto parts to counter the trade imbalance and support local manufacturers.
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While there is a perception of India as protectionist, actual applied tariffs are generally lower than those bound at the World Trade Organization, reflecting more liberal trade practices than perceived.
The upcoming review of India’s FTA with ASEAN signifies a crucial juncture in its trade strategy, seeking to fortify domestic industries without alienating key international partners. This move could redefine regional trade dynamics, potentially impacting Singapore and other ASEAN nations by necessitating adjustments in their export strategies to India.
India is reassessing its free trade agreements with ASEAN countries to tackle the challenge of cheap imports affecting local businesses. This strategic pivot aims to protect domestic industries while maintaining the delicate balance of international relations, with significant implications for regional trade partners like Singapore.
Source: Bisnis (2024)
