The review of the ASEAN-India Trade in Goods Agreement remains stuck ahead of the November 17 summit. With the bilateral trade deficit reaching $51.55 billion in FY26, India is pushing for stricter rules of origin to protect domestic industries. The stalemate means a final resolution is unlikely until at least early 2027.
The upcoming India-ASEAN Summit scheduled for November 17 in the Philippines is unlikely to yield a breakthrough regarding the long-standing review of the ASEAN-India Trade in Goods Agreement. Despite the high-level meeting, negotiators remain divided on key terms, effectively pushing any major resolution into next year.
The core of the friction lies in the widening trade gap. During the 2025-26 fiscal year, total bilateral trade between India and the ten-nation ASEAN bloc reached $128.38 billion. However, the data highlights a significant imbalance: India imported $89.96 billion worth of goods while exporting only $38.41 billion, resulting in a trade deficit of $51.55 billion. This large gap has become a primary concern for Indian policymakers who are seeking to balance trade relations.
At the heart of the negotiation is the issue of rules of origin. India has expressed concern that third-party goods, particularly from China, are being rerouted through Southeast Asian countries to enter the Indian market at lower tariff rates. By tightening these rules, the government aims to ensure that only goods truly manufactured within the ASEAN region benefit from the lower trade duties. For investors, this is a significant point because if successful, these tighter regulations could support domestic manufacturers in sectors like textiles, chemicals, and electronics by reducing the inflow of cheaper, indirectly imported products that often undercut local pricing.
The complexity of these talks is compounded by the diverse economic interests of the eleven nations involved. While the ASEAN bloc is eager to increase its market share in India, New Delhi is focusing on removing non-tariff barriers that have historically made it difficult for Indian exporters to compete within Southeast Asia. These different priorities were evident during the 15th AITIGA Joint Committee meeting held in Jakarta this past October, where sub-committees were tasked with accelerating work on institutional frameworks without reaching a definitive agreement.
With the next formal assessment scheduled for January 2027 in India, the current impasse suggests that significant changes to the trade pact are not imminent. Investors may track the progress of these sub-committee meetings, as the final outcome could influence the competitive landscape for companies that rely on export-import dynamics within these regions. The primary monitorable for the coming months remains the trend in the trade deficit and any administrative measures taken to address the inflow of rerouted third-party goods.