India-ASEAN FTA talks gain momentum to reduce trade deficit

New Delhi, July 6 (KNN) India is pushing for Free Trade Agreement (FTA) talks with the Association of Southeast Asian Nations (Asean) to have discussions on rules of origin and trade gap, reported Mint. 

Through such initiations India aims to renegotiate the trade agreement following a significant increase in the trade deficit with the 10-member block.

In FY23 alone, the trade gap ballooned by 70% to reach USD 43 billion, according to a government official familiar with the matter.

The widening trade deficit with Asean countries comes amid the bloc’s growing export and manufacturing capacity. 

Multinational corporations have been investing in Asean as part of their China-plus-one policy. 

Besides, the implementation of the production-linked incentive schemes has fuelled demand for intermediate products in India. The trade deficit with Asean was at USD 21.85 billion in FY19.

India mostly imports capital goods, raw materials and intermediates from Asean, as per experts and the tariff concessions under the  FTAs have also been advantageous to many sectors and adversely impacted domestic companies, especially chemicals and metals manufacturers. (KNN Bureau)