GROWING TRADE

WITH SOUTHEAST ASIA

EVOLVING BUSINESS RELATIONS
BETWEEN INDIA AND SOUTHEAST
ASIA - A STUDY REPORT

NOVEMBER 2013
 CONTENTS
1. RECENT FOREIGN TRADE AGREEMENTS ............................................................................ 3

2. TRADE GROWTH ........................................................................................................................ 4

3. POLICY SUPPORT ...................................................................................................................... 9

4. CHANGING SCENARIO ............................................................................................................. 10

5. CONCLUSION ............................................................................................................................. 13

6. APPENDIX 1 - OTHER REGIONAL TRADE AGREEMENTS OF INDIA ................................ 14

GROWING TRADE WITH SOUTHEAST ASIA

EVOLVING BUSINESS RELATIONS BETWEEN INDIA AND
SOUTHEAST ASIA - A STUDY REPORT
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1. RECENT FOREIGN TRADE AGREEMENTS

Trade agreements with Association of South East Asian Nations (ASEAN)

India’s engagement with the Association of South East Asian Nations (ASEAN) started with the framing
of its "Look East Policy" in the year 1991, which is discussed later. ASEAN has a membership of 10
countries – namely Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines,
Singapore, Thailand and Vietnam. India became a Sectoral Dialogue Partner of ASEAN in 1992 and Full
Dialogue Partner in 1996. In November 2001, the ASEAN-India relationship was further upgraded to the
summit level.

The 1st ASEAN Economic Ministers (AEM)-India consultations were held on 15th September, 2002, in
Brunei Darussalam, where the ministers, after discussing the Joint Study Report, decided to establish
an ASEAN-India Economic Linkages Task Force (AIELTF). The AIELTF was asked to prepare a draft
framework agreement to enhance ASEAN-India trade and economic cooperation before the 2nd AEM-
India consultations. Subsequently, at the First ASEAN-India Summit held on 5th November 2002 in
Phnom Penh, Cambodia, the Prime Minister of India made the following major announcements:

India will extend special & differential trade treatment to ASEAN countries, based on their level of
development, to improve their market access to India;
FTA within a 10-year time frame.

A Framework Agreement on Comprehensive Economic Cooperation between the ASEAN and India was
signed by the Prime Minister of India and the Heads of Nation/Governments of ASEAN members during
the Second ASEAN-India Summit on 8th October 2003 in Bali, Indonesia.

The key elements of the Framework Agreement on Comprehensive Economic Cooperation between the
ASEAN and India cover FTA in goods, services, investments and other areas of economic cooperation.
The Agreement also provided for an Early Harvest Programme (EHP) covering areas of economic
cooperation and a common list of items for exchange of tariff concessions as a confidence building
measure. However, due to differences of opinion on Rules of Origin, the EHP could not be implemented.

After 23 meetings of the ASEAN-India Trade Negotiating Committee (TNC), India and the ASEAN have
signed the following agreements:

Trade in Goods Agreement

Agreement on Dispute Settlement Mechanism
Protocol to Amend the Framework Agreement
Understanding on Article 4 of the Agreement on Trade in Goods Agreement

The Agreement on Trade in Goods under the Framework Agreement on Comprehensive Economic
Cooperation (referred to as the trade agreement, henceforth) between ASEAN and India is, essentially, a
realignment of the goal set under the framework agreed upon in 2003. The 2003 framework had set the
initial target dates for establishing the Indo-ASEAN free trade zones by 2011 for India and Brunei,
Indonesia, Malaysia, Singapore and Thailand; 2016 for India and Philippines; and 2011 for India and 2016
for the new ASEAN member states of Cambodia, Lao PDR, Myanmar and Vietnam. The target dates

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under the 2009 agreement have been decided as 2013 for India and Brunei, Indonesia, Malaysia,
Singapore and Thailand; 2018 for India and Philippines; and 2013 for India and 2018 for Cambodia, Lao
PDR, Myanmar and Vietnam. The trade agreement reiterates the commitment of providing for special
and differential treatment across ASEAN nations. This has been done to be able to enhance the
participation of new ASEAN member states and allow for flexibility to member countries to address the
issue of sensitive trade areas as provided in the framework agreement.

Table 1
Target dates for FTA
Revised
Countries Old target
target
India-Brunei, Indonesia, Malaysia, Singapore,
2011 2013
Thailand
India-Philippines 2016 2018
2011 (India),
2013 (India),
India-Cambodia, Lao PDR, Myanmar, Vietnam 2016
2018 (others)
(others)

In December 2012, India and the 10-nation ASEAN finalised an FTA in services and investments, a key
move aimed at strengthening economic engagement, and these are likely to be signed in 2013.

2. TRADE GROWTH

As per 2011-12 trade data from the Department of Commerce, the top ten export products from India are
petroleum products, gems and jewellery, transport equipment, machinery and instruments, drugs,
pharmaceuticals and fine chemicals, readymade garments RMG cotton and accessories, electronic
goods, other commodities, iron and steel and metal products. The top importers from India are United
Arab Emirates (UAE), USA, China, Singapore, Hong Kong, Netherlands, UK, Germany, Belgium and
Indonesia. India’s top ten imports include gold, electronic goods, machinery, pearls, semi-precious
stones, other commodities, coke, coal, metal ores and scraps, organic and inorganic chemicals,
transport equipment, fertilisers and vegetable oils. The top exporters to India include China, UAE,
Switzerland, Saudi Arabia, USA, Iraq, Kuwait, Germany, Australia, Nigeria and Indonesia.

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Figure 1
Region-wise share of India's trade in 2011-12

EU
Others countries
19% 14%
Africa
8%
North
NE Asia America
18% 9%

Latin
ASEAN America
West Asia-
10% 4%
GCC
18%

Source: Department of Commerce, GOI, IMaCS analysis

As can be seen in the figure above, the ASEAN region contributes a significant 10 per cent of the total
trade of India. The growth in imports and exports from the ASEAN region has been shown in the figure
below. India’s exports to the ASEAN region have increased from US$ 12.6 billion in 2006-07 to US$ 33
billion in 2012-13, at a CAGR of 17.4 per cent. On the other hand, India’s imports from ASEAN countries
have increased to US$ 43.4 billion in 2012-13 from US$ 18.1 billion in 2006-07, at a CAGR of 15.7 per cent.
As can be seen in the figure below, imports were growing at over 40 per cent for two years till 2011-12
after which they fell by 10 per cent in 2012-13; whereas exports remained more or less flat.

Figure 2
Growth in India’s total trade with ASEAN
50,000 50%
45,000
40%
Growth percentage

40,000
35,000 30%
US$ million

30,000 20%
25,000
20,000 10%
15,000 0%
10,000
-10%
5,000
0 -20%
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 (P)
Export Import Export growth Import growth

Source: Department of Commerce, GOI, IMaCS analysis

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Country-wise growth of trade is depicted in the table below. Maximum growth has been witnessed in
trade with Lao PDR and Brunei, albeit with the low base effect. Trade with Vietnam and Indonesia has
also increased at CAGRs of over 20 per cent since 2007-08.

Table 2
Growth in country-wise Indo-ASEAN trade (US$ million)

2012-13 5-year
Country 2007-08 2008-09 2009-10 2010-11 2011-12
(P) CAGR
Lao PDR 4.0 9.5 37.0 13.3 104.5 167.5 111%

Cambodia 56.4 49.61 50.6 74.95 107.07 124.2 17%

Brunei 237.7 415.2 453.1 257.2 1647.2 1,054.5 35%

Philippines 824.9 998.5 1061.8 1310.5 1448.5 1,691.9 15%

Myanmar 994.5 1150.6 1497.8 1338.3 1870.2 1,947.2 14%

Vietnam 1,783.8 2,147.3 2,360.8 3,716.3 5,452.5 6,118.0 28%

Thailand 4,111.8 4,642.1 4,671.7 6,546.3 8,344.6 9,219.8 18%

Indonesia 6,985.4 9,226.2 11,720.0 15,619.4 21,301.5 19,855.7 23%

Malaysia 8,588.2 10,604.8 8,012.2 10,394.8 13,538.2 14,878.0 12%

Singapore 15,501.8 16,099.8 14,046.7 16,964.8 25,458.0 21,339.7 7%

Source: Department of Commerce, GOI, IMaCS analysis

ASEAN trade with India

Globally, Singapore is the fourth largest export market for India, and it ranks 20 th in terms of imports.
Among the ASEAN countries, Singapore is the largest trading partner of India. It is ranked sixth, followed
by Indonesia, which is ranked ninth in terms of total trade. The other significant trading partners in the
region are Malaysia and Thailand.

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Table 3
Share of ASEAN countries in India’s foreign trade in 2011-12

Country Share in Rank Share in Rank

exports (%) (exports) imports (%) (imports)

Brunei Darussalam 0.29 45 0.15 55

Cambodia 0.03 115 0.00 148

Indonesia 2.18 11 2.99 11

Lao PDR 0.00 165 0.02 105

Malaysia 1.3 21 1.95 19

Myanmar 0.18 61 0.27 45

Philippines 0.32 44 0.09 67

Singapore 5.51 4 1.76 20

Thailand 0.97 27 1.1 25

Vietnam 1.22 23 0.35 42

Source: Department of Commerce, GOI, IMaCS analysis

About 60 per cent of India’s exports to the ASEAN region include products like mineral fuels, mineral
oils and products of their distillation, bituminous substances, mineral waxes, ships and related
structures, organic chemicals, meat, animal fodder, nuclear reactors, boilers, machinery and
mechanical appliances and parts thereof. About 60 per cent of India’s imports from ASEAN countries
include mineral fuels, mineral oils and products of their distillation, bituminous substances, mineral
waxes, edible oils and animal fat products, electrical machinery and equipment and parts thereof, sound
recorders and reproducers, television image and sound recorders and reproducers and its parts,
nuclear reactors, boilers, machinery and mechanical appliances and parts thereof.

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Table 4
Key products traded with ASEAN countries in 2011-12

Country Transaction Key items traded with India

by India
Mineral fuels, mineral oils and products of their distillation; bituminous
Export substances; organic chemicals, ships and related articles, cereals, seeds
Indonesia and fruits
Mineral fuels, mineral oils and products of their distillation; bituminous
Import
substances; animal or vegetable fats and oils and its products
Mineral fuels, mineral oils and products of their distillation; bituminous
Export
substances; organic chemicals, meats, cereals
Mineral fuels, mineral oils and products of their distillation; bituminous
Malaysia
substances; animal or vegetable fats and oils and its products; electrical
Import
machinery, and nuclear reactors and boilers, organic chemicals, wood
articles
Mineral fuels, mineral oils and products of their distillation; bituminous
Export
substances; ships and related articles, pearls, semi- and precious-stones
Singapore Mineral fuels, mineral oils and products of their distillation; bituminous
Import substances; electrical machinery, and nuclear reactors and boilers,
organic chemicals, ships and related articles
Export Pharmaceutical products, cotton, food industry residue, animal fodder
Cambodia
Import Animal or vegetable fats and oils and its products
Export Ships and related items
Brunei Mineral fuels, mineral oils and products of their distillation; bituminous
Import
substances
Iron and steel and its articles, pharmaceutical products, meat, animal
Export
Myanmar fodder
Import Wood and its articles, charcoal; vegetables and certain roots and tubers.
Meat, fish and crustaceans, molluscs and other aquatic invertebrates,
Export
Vietnam seeds and fruits, animal fodder
Import Electrical machinery, and nuclear reactors and boilers, coffee, tea, spices
Aluminium and its articles, nuclear reactors and boilers, pharmaceutical
Export
Lao PD RP products
Import Ores, slag and ash
Pearls, semi- and precious-stones, vehicles, nuclear reactors and boilers,
Export
organic chemicals, iron and steel, food industry residue, animal fodder
Thailand
Electrical machinery, and nuclear reactors and boilers, organic chemicals,
Import
plastic and rubber articles, pearls, semi- and precious-stones
Export Vehicles, meats, pharmaceutical products, seeds, fruits, rubber products
Philippines
Import Electrical machinery, and nuclear reactors and boilers, vehicles

Source: Department of Commerce, GOI, IMaCS Analysis

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3. POLICY SUPPORT

Look East Policy

In the year 1991-92, under the then Prime Minister of India, Mr PV Narasimha Rao, India launched the
“Look East Policy” (LEP); an active economic policy of engagement with Southeast Asia to be
implemented as an official initiative to achieve two objectives: 1) the encouragement of trade links with
individual partners and 2) provision of foreign employment for India’s own expanding work force. This
policy has been rigorously pursued by the successive governments of Mr Atal Bihari Vajpayee and Dr
Manmohan Singh. The essential philosophy of the LEP is that India must find its destiny by linking itself
more and more with its Asian partners and the rest of the world, and that India’s future and economic
interests are best served by greater integration with East and Southeast Asia.

First phase: Initially, the focus of India’s Look East policy was to forge closer economic ties with ASEAN
member states. Consequently, India became a Sectoral Dialogue Partner of ASEAN in 1992, a Full
Dialogue Partner in 1995, a member of the ASEAN Regional Forum in July 1996 and finally a Summit
Level Partner in 2002.
India has managed to achieve some major bilateral relations with the Southeast Asian (SEA) countries
since launching of the LEP. It has entered into a few bilateral FTAs with Thailand and economic
cooperation agreements with Indonesia and Singapore. Besides, India has also entered into a bilateral
defence agreement with Malaysia, which includes the supply of defence equipment and military training.
Special attention is also being given to Cambodia, Laos and Vietnam under bilateral agreements.
Myanmar, on the other hand, has special significance from India’s strategic and security perspective.

Second phase: The second phase, which began in 2003, was more comprehensive in its coverage;
extending from Australia to East Asia, keeping ASEAN as its core. The new phase marked a shift in focus
from trade to wider economic and security cooperation, political partnerships and physical connectivity
through road and rail links. Thus, India-ASEAN cooperation now covers broader fields including trade
and investment, science and technology, tourism and human resource development, transportation and
infrastructure and health and pharmaceuticals. India signed a “Long Term Cooperative Partnership for
Peace and Prosperity” with ASEAN, which is the cornerstone of India’s Look East policy. The signing of
the India-ASEAN FTA in 2009 was regarded as the crowning glory of India’s LEP.

The Prime Minister of India attended the 4th East Asia Summit (EAS) summit held at Thailand in 2009,
and promised a contribution of US$ 1 million over a period of 10 years for the Economic Research
Institute for ASEAN and East Asia (ERIA). India’s proposal for the establishment of the Nalanda
University in Bihar is under active consideration of the EAS. India played a leading role in the Bay of
Bengal Initiative for Multi Sectoral Technical and Economic Cooperation (BIMSTEC) grouping. It was
established on 6th June, 1997, taking Myanmar, Thailand, Sri Lanka, India and Bangladesh. Mekong
Ganga Cooperation (MGC) concept was initiated by India in 2000 in Vientiane (Laos), consisting of
Myanmar, India, Thailand, Laos, Cambodia and Vietnam. This project aims at revitalising and developing
trade, tourism, communications and transport. The MGC has undertaken the “Asian Highway Project” to
link up Singapore with New Delhi in South Asia via Kuala Lumpur, Ho Chi Minh City, Phnom Penh,
Bangkok, Vientiane, Chiang Mai, Yangon, Mandalay, Kalemyo, Tamu, Dhaka and Kolkata. On February 16,

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2011, India and Japan signed a CEPA aimed at giving greater market access to both countries. In 2011,
India’s Prime Minister and visiting President of Myanmar held talks in New Delhi, where India sought to
bolster its ties with Myanmar by offering an additional US$ 500 million in loans. In October 2011, India
and Vietnam signed six agreements, which included a pact to promote oil exploration in the South China
Sea. During the South Korea visit of the Indian President in July 2011, the two nations signed an
agreement for cooperation towards the peaceful use of nuclear energy. The two sides also discussed the
possibilities of South Korea using the India Space Research Organisation (ISRO) facilities for launching
its satellites. In February 2011, India signed CECA with Malaysia in Kuala Lumpur.

With Myanmar’s tentative opening up and improved relations between India and Bangladesh, an
opportunity also exists for India to boost trade and security ties with mainland and maritime Southeast
Asia. Amongst the latest developments in the LEP, the Union Finance minister Mr P. Chidambaram, in
his budget 2013-14, has proposed to link Northeast India to Myanmar. This move shows India's growing
influence in Myanmar. Assistance of the World Bank and the Asian Development Bank is sought for the
same. It is felt that planned infrastructure projects on both sides of the border with economic
cooperation will help the development of both regions.

Thus, we can say that the LEP is one of the most important and far reaching policies of India over the
past two decades, as the Prime Minister said, “The LEP is not merely an external economic policy; it is
also a strategic shift in India’s vision of the world and India’s place in the evolving global economy.”

4. CHANGING SCENARIO

The share of Asia as a trading partner has increased over the years for India. As shown in the figure
below, trade with Asian countries accounts for over 50 per cent of India’s total trade. Pursuing its ‘Look
East Policy’, a continuous dialogue was maintained with the ASEAN and the countries of Southeast Asia
at summit level engagements. The India-ASEAN Trade in Goods Agreement as well as negotiations on
Agreements on Trade in Services and Investment were concluded by end 2012. As discussed earlier,
India’s trade with the ASEAN region is growing; especially with Indonesia, Brunei and Lao PDR, where
the growth rates are over 22 per cent. Thailand has also become a significant trading partner with India.

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Figure 3.1
Region-wise share in India's trade (April to December, 2012-13)
Exports Unspecified
CIS &
Baltics region
1.3% 0.5%
Europe
18.8%

Africa
Asia 9.7%
50.4%

America
19.3%

Source: Department of Commerce, GOI, IMaCS analysis

Figure 3.2
Region-wise share in India's trade (April to December, 2012-13)
Imports
CIS & Unspecified
Baltics region
1.9% 0.3%
Europe
16.9%

Africa
8.7%

Asia America
60.6% 11.6%

Source: Department of Commerce, GOI, IMaCS analysis

Besides the ASEAN region, India’s trade with the Northeast Asian region comprising of China, Japan,
Republic of Korea, Hong Kong, Taiwan, Democratic People Republic of Korea, Macao and Mongolia is
also growing rapidly. It stood at US$ 143.88 billion during 2011-12, growing at 26.9 per cent over the
previous year. Among the countries in this region, Japan has emerged as a major trading partner for
India. Indian exports to Japan registered a growth of 24.30 per cent, while imports from the country
registered a growth of 40.18 per cent during 2011-12 over the previous year. The two countries have fixed
a bilateral trade target of US$ 25 billion by 2014. Since CEPA has come into force from 1 st August 2011, it
is expected that this target will be achieved in the stipulated period.

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To achieve the objectives of the LEP, India is negotiating bilateral FTAs with east and Southeast Asian
countries and has entered into a number of pacts and FTAs with Thailand and Singapore. There are also
plans to enter into FTAs with the remaining ASEAN countries – the Philippines, Cambodia, Laos,
Myanmar and Vietnam – by 2016. India’s trade with countries bordering the Northeast has seen the most
dramatic expansion; however, trade between Northeast India and its neighbouring countries has been
declining.

Since Northeast India is a natural bridge between India and Southeast Asia, an economic integration
with its transnational neighbours is expected to open up new opportunities for the region. In his speech,
the Prime Minister referred to India’s north-east region as a gateway to the “Asian Century”. India’s LEP
has transformed the role of the northeast region from being the periphery of India to becoming the
centre of a thriving and integrated economic space, which is the key to linking two dynamic regions with
a network of highways, railways, pipelines and transmission lines.

As discussed earlier, LEP in its second phase, beginning in 2003, gave a new dimension, wherein India
started looking towards partnerships with the ASEAN countries, both with BIMSTEC and the India-
ASEAN Summit dialogue, which is integrally linked to economic and security interests of the north-east
region of India. The first outcome was the Indo-Myanmar Trade Agreement signed in 1994 for the
establishment of trade based on equality and mutual benefit. The agreement initially provided for cross
border trade in twenty-two products, mostly agricultural/primary commodities, produced in the trading
countries. This agreement also made cross-border trade and contacts legal. In 2001, some more
products were added to the list of tradable items.

The Indian Prime Minister proposed the holding of an India-ASEAN car rally at the ASEAN-India summit
in Bali 2003, to draw attention to India’s geographical proximity with ASEAN countries. The rally was
flagged off on 22nd November, 2004, in Guwahati. The ASEAN-India car rally showed the existence of
land route connectivity that could facilitate free flow of trade, investment and tourism between ASEAN
and India. Through these efforts, the Government of India is showing its keenness in developing the
north-east region.

To facilitate trade and improve infrastructure in the region, India has undertaken a number of bilateral
and multilateral projects, aimed at enhancing connectivity between Northeast and Southeast Asia. For
instance, India built the 165-km long Indo-Myanmar Friendship Road connecting Tamu and Kalaymyo-
Kalewa, which was inaugurated in 2001. The optical fibre network between Northeast India and
Southeast Asia has been operational since 2009. The other important ongoing/potential infrastructure
projects are India-Myanmar-Thailand Trilateral Highway, Trans-Asian Highway, India-Myanmar rail
linkages, Kaladan Multimodal project, the Stilwell road, Myanmar-India-Bangladesh gas and/or oil
pipeline and Tamanthi Hydroelectricity project. India and Myanmar also agreed on the Kaladan Multi-
Nodal Transit Transport Facility, which plans connectivity between Indian ports on the eastern seaboard
and Sittwe Port in Myanmar, followed by river transport and then a road route to Mizoram, which will
provide an alternate route for transport of goods to Northeast India. Efforts are also underway to
improve infrastructure, particularly road links, at the second India-Myanmar border trade point at Rih-
Zowkhathar in Mizoram sector by upgradation of the Rih-Tidim and Rih-Falam road segments in
Myanmar. Apart from developing road links, efforts are underway to have a rail link from Jiribam in
Manipur to Hanoi in Vietnam passing through Myanmar.

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Thus we can say that for the complete implementation of the LEP, India is also following a “Look North
East Policy” within its own country.

5. CONCLUSION

As per The United Nation’s World Economic Situation and Prospects (WESP), 2013 report, four years
after the global financial crisis, the global economy is still struggling to recover. In 2012, growth of the
world economy weakened further. The global economy is expected to grow at 2.2 per cent in 2012, at 2.4
per cent in 2013 and 3.2 per cent in 2014.

Crises situations in the major developed economies have been a major cause of the global economic
slowdown. Several European economies and the Eurozone as a whole are already in recession, and
Eurozone unemployment increased further to a record high of almost 12 per cent. The US economy
slowed significantly during 2012 and growth is expected to beat 1.7 per cent in 2013. Deflationary
conditions continue to prevail in Japan. The economic problems in Europe, Japan and the US are spilling
over to developing countries through weaker demand for their exports and heightened volatility in capital
flows and commodity prices.

As per the report, the prospects for the next two years continue to be challenging. A worsening of the
Euro area crisis, the fiscal cliff in the USA and a hard lending in China could cause a new global crisis.
This situation clearly reveals that exports to the EU and US are expected to decline for India. Hence the
key focus should be Asia in the coming years.

At present, the LEP has become an established policy of having commitment to the SEA nations.
Commerce with SEA nations accounts for almost 50 per cent of India’s foreign trade. The LEP is
expected to usher in a new era of development for the Northeast through a network of pipelines, road,
rail and air connectivity, communication and trade. The emphasis must be on industrialisation and
growth of the region.

For further exchange, the LEP‘s scope can be expanded beyond trade to areas like human resource
development, democracy and culture – where India has a comparative advantage over the other Asian
countries. The Nalanda University Project is expected to play a vital role by strengthening India’s
relations with the SEA nations. Since India is a leading country of the world in information technology
and management sciences, many SEA countries are interested to set up IIT and IIM campuses in their
places. Tourism can also play an important role in upgrading the present status of LEP. Places of
Buddhist interest like Bodh Gaya, Sarnath and Nalanda and places of Muslim interest like Taj Mahal,
Red Fort, Fatehpur Sikri, Ajmer etc. need to be suitably promoted to attract the people of the SEA
nations.

If India can fulfil the enacted agreements with the SEA nations and make new ties and strategies, it can
be a stabilising and balancing force in Asia; and also diversify its trade basket significantly, which is the
need of the hour.

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6. APPENDIX 1 - OTHER REGIONAL TRADE AGREEMENTS OF INDIA

Trade Agreements

Along with multilateral trade negotiations, India has also pursued regional and bilateral trade
negotiations with vigour. India enjoys different types of trade agreements with many countries. The
complete list is given below:

Free Trade Agreement (FTA):

Under a Free Trade Agreement, two countries or group of countries agree to eliminate tariffs, quotas
and preferences on most of the goods (if not all) between them. Countries choose FTAs if their economic
structures are complementary and not competitive. India enjoys FTAs, till date, with the following
countries:
Sri Lanka
Thailand

Bilateral Trade Agreement:

A bilateral or multilateral treaty or any other enforceable compact commits two or more nations to
specified terms of commerce, most of time involving mutually beneficial concessions. India enjoys trade
treaties, with the following countries:
Bangladesh
Bhutan
Ceylon
Maldives
China
Japan
Korea
Mongolia
There is also an India-Africa trade agreement with African countries.

Trade Treaty and Treaty of Transit:

Nepal

Comprehensive Economic Cooperation Agreement (CECA): India enjoys CECA with the following countries:
Singapore
Malaysia

Comprehensive Economic Partnership Agreement (CEPA): India enjoys a CEPA with the following countries:
Japan
South Korea

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Framework Agreement:
A framework agreement is one, which sets the stage for future substantive liberalisation by defining the
scope and terms of reference for some new area of discussions. The list of countries with which India
enjoys a framework agreement is mentioned below:
The Member States of the Cooperation Council for the Arab States of the Gulf (GCC).
ASEAN nations.
Chile
Thailand

Regional Agreement:
India is part of the South Asia Free Trade Agreement (SAFTA) with Pakistan, Nepal, Sri Lanka,
Bangladesh, Bhutan and the Maldives.

Preferential Trade Agreement (PTA):

This agreement gives preferential access to only certain products. It is done by reducing tariffs, but it
does not abolish them completely. PTA is established through trade pacts, and it is the weakest form of
economic integration. India enjoys PTA with the following countries:
Afghanistan
Chile
MERCOSUR: A regional group, with member states of Brazil, Argentina, Uruguay and Paraguay.

Regionally, India is a member of the South Asia Association of Regional Co-operation (SAARC) and the
Bangladesh, India, Myanmar, Sri Lanka, Thailand Economic Co-operation (BIMSTEC). India is also a
member of the General Agreement on Tariffs and Trade (GATT) and the World Trade Organisation (WTO).

Some of the key bilateral agreements, which were concluded in the recent past, include CEPA with
Republic of Korea, CECA with Malaysia, CEPA with Japan, India-EU Broad-based Trade and Investment
Agreement (BTIA) Negotiations etc.

Besides these, India's current engagements in Regional Trade Agreements are as follows:
Association of South East Asian Nations (ASEAN) and India Free Trade Agreement (FTA) negotiations
India-Sri Lanka Comprehensive Economic Partnership Agreement (CEPA) negotiations
India-Thailand Comprehensive Economic Cooperation Agreement (CECA) negotiations
Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) Free
Trade Agreement (FTA) negotiations
India-Gulf Cooperation Council (GCC) Free Trade Agreement (FTA) negotiations
India-Mauritius Comprehensive Economic Cooperation and Partnership Agreement (CECPA)
negotiations
India-SACU (South African Customs Union) Preferential Trade Agreement (PTA) negotiations
Second Review of India-Singapore Comprehensive Economic Cooperation Agreement
Expansion of India-Chile Preferential Trade Agreement (PTA)
India-MERCOSUR Preferential Trade Agreement (PTA) Negotiations
India-Pakistan Trading Arrangement
India-EU Broad-based Trade and Investment Agreement negotiations

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India European Free Trade Association (EFTA) Negotiations on broad-based Bilateral Trade and
Investment Agreement
Global System of Trade Preferences (GSTP)
Asia Pacific Trade Agreement (APTA)
India-New Zealand Free Trade Agreement/Comprehensive Economic Cooperation Agreement
India-Canada Comprehensive Economic Partnership Agreement (CEPA)
India-Australia Comprehensive Economic Cooperation Agreement (CECA)
India-Indonesia Comprehensive Economic Cooperation Agreement (CECA)

Table 5
India’s regional trade agreements in Asia
Regional trade agreements of India
Free Trade Agreements (FTA)
Sri Lanka, Thailand, ASEAN-Goods
Bilateral trade agreements
Bangladesh, Bhutan, Sri Lanka, Maldives, China, Japan, South Korea, Mongolia
Trade and transit treaty
Nepal
Comprehensive Economic Cooperation Agreement (CECA)
Singapore, Malaysia
Comprehensive Economic Partnership Agreement (CEPA)
Japan, Korea
Framework agreements
ASEAN nations, Thailand
Regional agreement
SAFTA (Bangladesh, Bhutan, Maldives, Nepal, Pakistan, Sri Lanka)
Trade in Services agreement
SAARC (Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan Sri Lanka)
Preferential Trade Agreements (PTA)
Afghanistan

Source: Department of Commerce, Government of India; IMaCS Analysis

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Growing Trade with Southeast Asia 17