India has set strict deadlines to review the ASEAN-India Trade in Goods Agreement (AITIGA) following a record $45.2 billion trade deficit in FY25. The review focuses on securing better market access for Indian exports and curbing the misuse of tariff rules to prevent indirect imports from third countries like China.
The joint committee for the ASEAN-India Trade in Goods Agreement (AITIGA) is working under new, strict deadlines to address structural imbalances in the current trade pact. With India currently hosting the 13th AITIGA joint committee meeting in New Delhi from July 6-10, 2026, the primary objective is to finalize pending chapters that have delayed the review process.
The Trade Deficit and Economic Context
The urgency behind these talks is driven by a widening trade deficit. India’s merchandise trade deficit with the ASEAN bloc reached $45.2 billion in FY25. This gap has grown significantly since the agreement was first implemented in 2010, when the deficit stood at less than $7 billion. Despite total bilateral trade reaching $128 billion in 2025-26, Indian policymakers have expressed concerns that the benefits of the current agreement are not being shared equitably, leading to a focus on re-negotiating terms to favor domestic export growth.
Critical Sticking Points: Rules of Origin and Market Access
Discussions are heavily centered on two major areas: market access and rules of origin. India is seeking improved opportunities for its exporters to sell goods in ASEAN markets, while also pushing for tighter controls on how goods are classified under the agreement. A key concern for India is the practice where goods manufactured in third countries—specifically China—are routed through ASEAN nations to gain preferential tariff benefits. To counter this, India is advocating for more robust verification processes and stricter rules of origin to ensure that only goods truly produced within the bloc receive tax advantages.
The Path Forward for Trade Relations
While the original goal was to conclude the review by the ASEAN-India Summit in October 2025, progress was stalled by disagreements over import duties and the complexity of the trade rules. The current time-bound approach is intended to resolve these hurdles by demanding concrete deliverables from various sub-committees responsible for customs procedures and trade facilitation. For Indian businesses and investors, the outcome of this review is vital. Success could lead to a more balanced trade environment and potential growth for sectors that have historically faced barriers to entry in Southeast Asia. Conversely, if negotiations remain deadlocked, it could continue to exert pressure on India's balance of payments and limit the effectiveness of the region as an export destination. Investors should watch for updates on the finalization of the rules of origin and any official announcements regarding new tariff structures following the conclusion of the ongoing meetings in New Delhi.