India and the Association of Southeast Asian Nations (ASEAN) have commenced discussions on a new "package" aimed at resolving trade disputes and fostering stronger economic ties. This development follows a round of ASEAN-India Trade in Goods Agreement (AITIGA) review talks held in Delhi last month. The ASEAN bloc has proposed a new framework intended to create a "landing zone" for India to address its concerns regarding the widening trade imbalance.

The move to fast-track AITIGA review talks comes against the backdrop of rising trade tensions and concerns about the existing free trade agreement not adequately addressing the trade imbalance between India and ASEAN. India's trade deficit with ASEAN stood at approximately $43.57 billion in FY 2022-23.

Malaysia, currently hosting the 57th ASEAN Economic Ministers (AEM) & Related Meetings, has played a crucial role in facilitating these discussions. The Indian delegation, led by Minister of State for Commerce & Industry Jitin Prasada, is participating in the meetings in Kuala Lumpur.

Mastura Ahmad Mustafa, deputy secretary general (trade), ministry of investment, trade and industry, Malaysia, indicated that special AEM meetings were convened following discussions in Delhi to reach key decisions that would facilitate a substantial conclusion of the review process before the end of the year. She stated that a new package has been offered to India, providing a constructive basis for progressing the talks and expressed optimism about the positive feedback received from India.

While the specifics of the "package" remain undisclosed, sources suggest that the proposals are designed to address current trade frictions and harness the untapped potential of economic ties. Potential inclusions in the final framework involve joint ventures in high-potential sectors such as electronics and pharmaceuticals.

The AITIGA, which came into force in 2010, has faced criticism for not adequately addressing the trade imbalance between India and ASEAN countries. India has expressed concerns about inequitable tariff liberalization under the agreement and has emphasized the need to rectify this.

Several challenges remain in the AITIGA negotiations, particularly concerning rules of origin and non-tariff barriers. India is insisting on stricter enforcement of rules of origin to prevent third-country transhipment, while ASEAN exporters are seeking predictability and simplified procedures. Non-tariff barriers, often embedded in domestic regulations, require regulator-to-regulator cooperation and time-bound work plans for resolution. Sensitive sectors like automotive, agriculture, and steel add political complexity, with industry groups lobbying to protect local producers.

India and Malaysia have agreed to take steps to speed up the review of the AITIGA for its substantial conclusion by 2025. The decision to expedite the review was made during a bilateral meeting between Minister of State of Commerce Jitin Prasada and Malaysian Deputy Minister of Investment, Trade, and Industry Liew Chin Tong.

The next round of talks for the India-ASEAN trade deal review is scheduled to be held in Indonesia in October. India is also engaged in FTA negotiations with other countries and blocs, including the EU, Chile, Peru, and the Eurasian Economic Union (EAEU). A new five-year Plan of Action (2026–2030) was adopted on July 10 to deepen the Comprehensive Strategic Partnership between India and ASEAN, focusing on digital infrastructure, disaster response, defence, maritime security, healthcare, and the economy.