Whalesbook
India, ASEAN Revamp Trade Pact
India and the Association of Southeast Asian Nations (ASEAN) are on track to finalize an updated trade agreement by the end of 2024. This aims to boost trade and investment flows between India and all ten ASEAN member states. The original pact was signed in 2009. Renegotiations began this year as India's trade deficit with the bloc grew and the global economy changed.
Tackling India's Trade Gap with ASEAN
The review of the India-ASEAN Trade in Goods Agreement (AITIGA) is a complex negotiation for the Commerce and Industry Ministry. India's trade deficit with the rapidly expanding ASEAN bloc reached $44 billion in FY23, up sharply from $8 billion a decade ago. Research shows that while imports from ASEAN have risen, India's exports have stagnated or declined since 2010, worsening this imbalance. A recent NITI Aayog report highlighted that India's exports to Free Trade Agreement (FTA) partners have contracted for three consecutive quarters, showing difficulties in using current agreements for export growth amid global uncertainty.
Boosting Digital Payments: UPI to Vietnam
Digital payments will see a significant boost. Prime Minister Modi announced that India's Unified Payments Interface (UPI) will soon be linked with Vietnam's Fast Payment System. This initiative, along with closer cooperation between the central banks, is expected to ease financial transactions and promote economic integration. These links are vital for growing economies needing smooth cross-border trade.
Deepening Sectoral Ties and Resilience
Beyond digital finance, cooperation will deepen in critical minerals, rare earth elements, and energy. India expects to export agricultural, fisheries, and animal products more easily to Vietnam. A Memorandum of Understanding between drug regulators will also improve access to Indian pharmaceuticals in Vietnam, strengthening supply chains and economic security for both nations. Both countries also plan to bolster cooperation in high-technology, manufacturing, and startup ecosystems.