AFTA and India's Relative Tariff Disadvantage

Abstract

Tariffs on intra-ASEAN trade are reduced under the Common Effective Preferential Tariff (CEPT) Scheme for ASEAN Free Trade Association (AFTA). As a result of AFTA agreement some of India's export items that are imported by the individual ASEAN countries both from India and the rest of the ASEAN might be affected. Here in this study an attempt has been made to find out the possible impact of AFTA tariff reduction on India's exports. The results show that the percentage of export values is substantial in the 5-10 per cent tariff disadvantage slab for all the four ASEAN countries included in our sample. The study also reveals that about 33 per cent and 64 per cent of India's exports to Indonesia and Thailand respectively face more than 20 per cent tariff disadvantage range. However, a larger proportion (41%) of India's export to Malaysia falls in the category of 0-5 per cent tariff disadvantage slab. More than 50 per cent of India's exports to Philippines face a tariff disadvantage range of 10-15 per cent.