ASEAN is one of India`s main trading partners. The ECSC with ASEAN came into force on January 1, 2010 and bilateral trade between the two parties increased from about $43 billion in 2009-10 to $97 billion in 2018-19. As with SAFTA`s Indian trade, bilateral trade between India and ASEAN grew faster than India`s total trade with the world, resulting in an increase of 9.4% to 11.5% of ASEAN`s share of Indian world trade. However, unlike India-SAFTA trade, Indian imports from ASEAN grew significantly faster than Indian exports to ASEAN. Another important point to take into account is that imports from ASEAN grew much faster than Indian imports from the world. The faster growth in imports has led to a significant increase in India`s trade deficit with ASEAN, from less than $8 billion in 2009-10 to about $22 billion in 2018-19. ASEAN`s share of India`s total trade deficit increased from about 7% to 12% over the same period. Vietnam, which is becoming a huge competition for many economies, has already signed a trade pact with the EU. Fifth, it is essential for India to carefully select its new free trade partners. While the focus should be on countries with greater trade complementarity, making the EU, the UK and the US natural allies, it must be kept in mind that these countries are tough negotiators. The India-EU free trade agreement has been on hold since 2007, as there is no consensus on sectors such as automotive, alcoholic beverages, dairy and fishing services, RRI and fashion 1 (ITES/BPO) and fashion 3 (specialist professionals).
While Trade and Industry Minister Piyush Goyal hopes for a limited trade agreement with the United States after the U.S. presidential election, a full-fledged free trade agreement with the United States is a remote possibility if conflicts such as pharma, data security and agriculture are not sorted. However, increased cooperation in new areas such as artificial intelligence, green technology, digital and medical equipment should lead to a more balanced outcome. As you know, the United States is a difficult negotiator, as we have seen recently. Fourth, India could focus more on bilateral trade agreements than multilateral agreements. Negotiations on the Comprehensive Regional Economic Partnership (RCEP) have encouraged India to learn in the strongest possible terms. India`s last-minute decision to withdraw from the RCEP in 2019 was prompted by the industry`s appeal to the Modi government. In retrospect, given China`s dominance in the trade pact and India`s reluctance to open its domestic market to Chinese producers known for their subsidy and dumping practices, the decision was reasonable. Typically, trade agreements, including the one with the Association of South Asian Nations (Asean), have not worked in India`s favour, but experts felt that New Delhi should not only remain in common with other countries to stimulate trade, but also to be heard within the international community.
Foreign Minister Harsh Shringla`s seven-day trip to Europe a few weeks ago is seen as an important development in this direction. On Thursday, the first autonomous summit between Prime Minister Narendra Modi and his counterpart Xavier Bettel was held via videoconference, the first highlighting the need to expand trade and economic cooperation between India and the EU.