ASEAN–India Free Trade Area

The ASEAN–India Free Trade Area (AIFTA) is a free trade area among the ten member states of the Association of Southeast Asian Nations (ASEAN) and India. The initial framework agreement was signed on 8 October 2003 in Bali, Indonesia. and the final agreement was on 13 August 2009. The free trade area came into effect on 1 January 2010. India hosted the latest ASEAN-India Commemorative Summit in New Delhi on 20–21 December 2012. As of 2011-12, two-way trade between India & ASEAN stood at US$79.86 billion surpassing the US$70 billion target.

The ASEAN–India Free Area emerged from a mutual interest of both parties to expand their economic ties in the Asia-Pacific region. India's Look East policy was reciprocated by similar interests of many ASEAN countries to expand their interactions westward.

After India became a sectoral dialogue partner of ASEAN in 1992, India saw its trade with ASEAN increase relative to its trade with the rest of the world. Between 1993 and 2003, ASEAN-India bilateral trade grew at an annual rate of 11.2%, from US$2.9 billion in 1993 to US$12.1 billion in 2003. Much of India's trade with ASEAN is directed towards Singapore, Malaysia, and Thailand, with whom India holds strong economic relations.

In 2008, the total volume of ASEAN-India trade was US$47.5 billion. ASEAN’s export to India was US$30.1 billion – a growth of 21.1 per cent in comparison with that of 2007. ASEAN’s imports from India were US$17.4 billion – a growth of 40.2 per cent in comparison to that of 2006. As for foreign direct investment (FDI), the inflow from India to ASEAN Member States was US$476.8 million in 2008, accounting for 0.8 per cent of total FDI in the region. Total Indian FDI into ASEAN from 2000 to 2008 was US$1.3 billion. The ASEAN-Dialogue Partners trade and investment statistic data can be accessed through http://www.asean.org/22122.htm.

Acknowledging this trend and recognising the economic potential of closer linkages, both sides recognised the opportunities for deepening trade and investment ties, and agreed to negotiate a framework agreement to pave the way for the establishment of an ASEAN–India Free Trade Area (FTA).

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