Prime Minister Narendra Modi and his Malaysian counterpart, Anwar bin Ibrahim, met on the sidelines of the BRICS summit in Rio de Janeiro, where they emphasized the importance of a swift conclusion to the review of the ASEAN-India Free Trade Agreement (FTA). This discussion takes place amidst growing unease from ASEAN members following recent remarks made by Indian Commerce & Industry Minister Piyush Goyal.

The ASEAN-India FTA, officially known as the ASEAN-India Trade in Goods Agreement (AITIGA), was signed in 2009 and implemented in January 2010. In August 2023, both sides agreed to conduct a complete review of the agreement, with a target completion date of 2025. The review is a long-standing demand of Indian industry, which seeks an upgraded pact to address current asymmetries in bilateral trade, making it more balanced and sustainable.

Since the implementation of the FTA, India's trade deficit with ASEAN has widened significantly. Indian officials report that India's exports have remained around USD 38-39 billion annually, while imports from the 10-nation ASEAN bloc have surged to USD 86 billion. This imbalance has led India to seek a review aimed at eliminating barriers and addressing misuse of the agreement.

One of the key issues is the difference in tariff concessions offered by India compared to some ASEAN countries. While India offered duty concessions on 71% of its tariff lines, some ASEAN nations, such as Indonesia, opened only 41% of their tariff lines, with Vietnam at 66.5% and Thailand at 67%. This disparity has contributed to the widening trade deficit.

Concerns have also been raised regarding the rules of origin, which are perceived as weak and have led to the dumping of Chinese goods into India via some ASEAN countries. Commerce Minister Piyush Goyal has expressed concerns that the FTA inadvertently opens India's market to Chinese goods routed through ASEAN, effectively making ASEAN countries "the B team of China".

Despite nine rounds of negotiations, progress on the FTA review has been slow. The 10th review meeting is expected to be held in New Delhi mid-next month. If revision efforts fail, India may consider invoking the termination clause of the 2009 pact.

During the meeting at the BRICS summit, Modi congratulated Malaysia for its successful chairmanship of ASEAN. He also welcomed Malaysia's continued support for a strengthened ASEAN-India Comprehensive Strategic Partnership, including the prompt and successful completion of the FTA review. In addition to discussions on the FTA review, the two leaders also explored establishing an Indian Institute of Technology (IIT) in Malaysia. They reviewed progress in bilateral relations across various sectors, including trade and investment, defense, education, healthcare, tourism, and people-to-people connections.

The Ministry of External Affairs (MEA) has conveyed India's hope to complete the FTA review as early as possible and to continue engaging with ASEAN on this matter. India is seeking an upgraded pact that rectifies trade asymmetries and fosters more balanced and sustainable trade relations. This includes stronger safeguard measures and stricter rules of origin.