ASEAN–India Free Trade Agreement (FTA) and its Impact on India

Abstract

The ASEAN–India Free Trade Agreement (FTA) has brought opportunities as well as challenges to the Indian industry since it came into force on 1 January 2010. There is no clear-cut estimates about the gains which will come to India especially in the sectors of agriculture, plantation and fisheries. However, some of the sectors which are labour intensive or unorganized will be facing bigger challenges.

 This article attempts to examine the impact of FTA where the tariff is either reduced or eliminated on some of the agricultural products like fisheries, tea and coffee, which have been projected as sensitive for India. The commitment of India and ASEAN under the FTA is analyzed along with the trade and tariff data. While doing so the article looks at some of the empirical evidence to examine the impact of India’s unilateral tariff liberalization in the Post-Uruguay Round by taking into consideration India’s imports, domestic production, etc. These results are then extrapolated to examine the impact of tariff liberalization on the domestic economy in view of India’s commitment in the ASEAN–India FTA.

 The study is divided into three parts. The first part deals with the history of India–ASEAN relationship and highlights the features of India–ASEAN FTA. The second part does a case study of fisheries, tea and coffee with regard to FTA and likely impact on India. The final part gives a broad conclusion of the study.

 The study first looks at the bilateral trade data and then highlights the salient features of India–ASEAN FTA. It then reviews some of the literary works that have been carried out in this regard. The study thereafter looks at the historical trends of production, prices, trade values and tariffs on identified items at a national level as well as the items in India’s tariff liberalization programme (TLP). In the next section, while identifying the position, it also examines the position of these items in ASEAN’s TLP so as to assess whether Indian producers will get equal opportunities for preferential market access there or not. A comparison of the unit value price of Indian producers as well ASEAN members has been made to look at their respective competitiveness not only in the international markets but in each others’ market as well. The study gives its finding at the end summarizing the threats and the opportunities for Indian producers.