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25 Years of ASEAN-India Relations: What’s Next?

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25 Apr 25 Years of ASEAN-India Relations: What’s Next?

2017 marks the 25th anniversary of dialogue relations between ASEAN and India. Trade and investment flows between India and ASEAN member states have rapidly increased in the past few years, but both sides feel that there is room for growth.

India is one of the parties currently negotiating the Regional Comprehensive Economic Partnership (RCEP) trade deal with ASEAN members. Talks on the RCEP were originally slated to be substantially complete by the end of 2015, but negotiations are still ongoing and will enter an 18th round in May.

Existing Trade and Investment Links

ASEAN as a whole is currently India’s fourth largest trade partner, with the ASEAN nations and India linked via the ASEAN-India Free Trade Area (AIFTA). Trade with ASEAN comprises over 10% of India’s total trade with the world. Annual trade between India and ASEAN was approximately US$ 76.53 billion in 2014-15. Trade figures declined to US$65.04 billion in 2015-16, but this is attributed to falling commodity prices and the general slowdown of the global economy.

Going Forward: Aligning National Agendas

However, critics of the status quo argue that the AIFTA, which was declared officially complete in 2015, benefits ASEAN more than it does India. ASEAN businesses have enjoyed greater access to the Indian market, but Indian businesses are now concerned about competition. For example, India’s plantation sector is wary about ASEAN’s powerful agribusinesses.

In this context, it appears that many in India are optimistic about getting more from the RCEP. One key issue that has emerged is India’s desire for greater ease of movement for its professionals. India may be unwilling to yield ground unless other RCEP parties agree to measures such as greater mutual recognition in areas like accounting, medical services, banking and ICT. India also wants streamlining of regulations to make it easier for Indians to get employment passes in countries like Singapore.

On the other side of the table, ASEAN has called for India to open up certain sectors and reduce remaining tariff and non-tariff barriers. At last year’s ASEAN-India Summit, India’s civil aviation sector was highlighted as one area for liberalisation – there is potential for greater air connectivity, with carriers linking key cities in ASEAN and India. An aviation agreement might not be part of the RCEP proper, but it could factor into the wider picture as ASEAN and India work to accommodate each other’s core economic interests.

“If both sides can work together to integrate their economies to enhance trade and investment flows, we will have a big impact (on) Asia’s growth,” said Singapore Prime Minister Lee Hsien Loong at the ASEAN-India Summit in September 2016.

Photo Credit: Ministry of Foreign Affairs, Laos / ASEAN Secretariat