ASEAN-India Free Trade Agreement Research Articles

Are Indian Agricultural Commodities Competitive under the ASEAN-India Free Trade Agreement?

Are Indian Agricultural Commodities Competitive under the ASEAN-India Free Trade Agreement?

Role of ASEAN-India Free Trade Agreement in India’s International Trade

Emerging economics view Foreign Trade Agreements (FTAs) as a means of development through reduced tariffs and access to low cost products. They not only lead to development of secure international trade but also promote manufacturing in domestic territories. AIFTA (ASEAN India Free Trade Agreement) inked in 2010 paved way for much needed manufacturing and trade boost for both India and ASEAN member states. With more than a decade’s performance till date, this research paper attempts to evaluate the role AIFTA played in meeting the intended objectives. This qualitative research is based on secondary data released by government of India. An attempt has been made to draw patterns and examine if ASEAN countries occupy a prominent place in India’s international trade. Further a comparison with major trading partners (USA, UAE, UK, China and Australia) reveals that a lot needs to be done. It is observed that the trade deficit of India with ASEAN is continuously increasing, depicting a case of trade diversion instead of trade creation against the expected lines.A deeper look at top fifteen commodity groups internationally traded by India highlight the role of only two ASEAN nations and more policy boosts are needed to reap desired benefits from ‘look east policy’ of the government. In order to bolster economic development, augment manufacturing sector and generate employment India needs to strategically look at bilateral trade options with each of the member states or revisit ASEAN FTA to for trade to peak leading to economic growth.

Impact of ASEAN- India Free Trade Agreement (AIFTA) on Palm Oil Trade

Aims: To analyse the trade creation and trade diversion effect of the ASEAN-India Free Trade Agreement (AIFTA) on palm oil trade among the member countries.
 Data and Methodology: Data on palm oil exports of major Association of South East Asian countries (ASEAN) member countries such as Indonesia (64.10%), Malaysia (31.52%), Thailand (2.18%), Singapore (1.95%) and Philippines (0.25%) were collected for the period of 21 years (2000–2020) and used for the analysis. The Gravity model by Ordinary Least Square (OLS) and Poisson Pseudo-Maximum Likelihood (PPML) methods were estimated with the panel data.
 Results: As expected gravity model variables the distance had a negative impact on the palm oil trade between India and ASEAN member countries. The tariff rates and export prices had a negative impact on the palm oil trade whereas; the population of ASEAN members (exporters), GDP of ASEAN members and exchange rate were insignificant. The AIFTA had a positive and significant effect on the palm oil trade from ASEAN member countries to India which denoted the trade creation effect between ASEAN members and India.
 Conclusion: The analysis showed a pure trade creation effect of AIFTA in the time and country fixed effect model. The results suggested that the palm oil trade could be pushed for further trade liberalisation in the AIFTA.

Trade Competitiveness of Palm Oil Export from ASEAN Countries

Aims: To study the competitiveness, import intensity and structural break of palm oil exports from ASEAN member countries to the Indian market for the period 2000 to 2020.
 Data and Methodology: The relevant data was collected from UNCOMTRADE for the period of 21 years (2000 to 2020). The tools used for the analysis were Revealed Symmetric Comparative Advantage (RSCA), Import Intensity Index (III) and Chow test.
 Results: The study revealed that Indonesia had lost its comparative advantage due to differential tariff rates imposed by India between Indonesia and its close competitor Malaysia. After 2011, the import intensity index clarifies that there was a gradual decrease in imports from Indonesia. However, Malaysia and Thailand showed an upward trend in import intensity index till the year 2018. After 2018, Singapore had an upward trend in import intensity. From chow test, there was a significant difference in importing palm oil from ASEAN countries to India before and after signing AIFTA (ASEAN- India Free Trade Agreement).
 Conclusion: Considering India’s demand for palm oil which is expected to double by 2030, so sustainable palm oil cultivation is recommended and a balanced approach should be taken to fix the tariff rate to protect domestic producers and refineries without compromising consumer demand.

Review of ASEAN-India Free Trade Agreement Using Revealed Comparative Advantage Index

This paper tries to evaluate India’s concerns with AIFTA (Asean India Free Trade Agreement). The main objective of the paper is to study the Revealed Comparative Advantage Index of Indian exports in relation to ASEAN Countries. The RCA index reveals that India has comparative advantage in many product categories but we have not been able to utilize our advantage and in absolute terms is reflected by widening trade deficits with ASEAN nations. So an in depth analysis has been done to analyse India’s trade with ASEAN countries and also through RCA index Industry categories have been identified where India has revealed comparative advantage. Keywords: FTA’s, Trade deficit, Free Trade Agreements, ASEAN, Revealed Comparative Advantages (RCA) JEL Classification: F31, O34, F1.

Effects of ASEAN-India Free Trade Agreement on agricultural trade: The gravity model approach

This paper analyses the trade creation and trade diversion effect of ASEAN-India Free Trade Agreement (AIFTA) on agricultural trade among the member countries. Data on 50 countries with five major FTAs for the period 2005–2014 were used. Gravity model by ordinary least square and Poisson Pseudo-Maximum Likelihood (PPML) methods was estimated. The PPML method corrects the problem of zero trade and heteroscedasticity in the regression model. Analysis shows a pure trade creation effect of AIFTA, MERCOSUR, and EU-15 in the time fixed effect model. Under the time and country fixed effect model, AIFTA, SAPTA, and NAFTA have stronger trade creation effect than trade diversion effect. These results suggest that agricultural sector can be pushed for further trade liberalisation in the FTAs.

Global auto industry and product standards

Global auto industry and product standards

Market Orientation and Export Performance under ASEAN–India Free Trade Agreement: The Case of India’s Rubber and Rubber Products

The countries involved in the ASEAN–India Free Trade Agreement (AIFTA) are major producers/exporters of tropical commodities including natural rubber (NR). India is the sixth largest producer and second largest consumer of NR in the world. The country is also a major importer of NR and exporter of rubber products. The import of NR worth US$ 785.44 million and export earnings of rubber products worth US $244.17 million from ASEAN region during the year 2017–18 indicated the importance of AIFTA in the rubber sector of India. Therefore, an in-depth analysis on the pattern and specialisation of rubber and rubber products exported from India is done using trade indicators such as revealed comparative advantage, regional orientation, intra-industry trade and Galtonian regression. The results indicate no considerable change after the establishment of AIFTA in the pattern and specialisation in exports of rubber and rubber products from India to ASEAN.

Evaluating the Trade, Revenue and Welfare Implication of Plantation Crops under ASEAN–India FTA

This article examines the impact of ASEAN–India Free Trade Agreement on India’s special products categories, namely, coffee, tea and pepper based on partial equilibrium model. The Software for Market Analysis and Restrictive Trade (SMART) model has been used to estimate the trade creation (TC) and trade diversion (TD) effect, revenue effect and welfare effect for the above-mentioned commodities. The results from the SMART simulation analysis indicate that the increase in trade for both the scenarios is mainly driven by TC rather than TD. Further, the study also assesses how the total trade effect is distributed across the major ASEAN countries for each commodity and found that Indonesia and Vietnam are the biggest gainers in terms of TC effect in both the scenarios. JEL Classification: F13, F15, Q1

Dynamics of Trade Specialization and Trade Performance of ASEAN–India Free Trade Agreement

In the present era of globalization, trade is always considered as an indispensable catalyst for the growth and development of any nation. The present study examines the trade performance and degree of trade specialization of India and ASEAN members for the pre- and post-AIFTA period at Harmonized Standard (HS) 6-digit level of product classification. The study evaluates the data sources viz. United Nations Commodity Trade Statistics Database (UN COMTRADE), United Nation Conference on Trade & Development (UNCTAD) and trade map to evaluate the trade specialization of India and ASEAN members by using Lafay Index (LFi) approach. The present study found that though India experiences a shift from low specialized economy towards a more competitive and specialized one, still, it faces a competitive disadvantage from ASEAN members for distinctive industry levels. The study suggests that India should confront issues such as technological dissemination, diversification of merchandise manufactured, quality sophistication and reliability at different industry levels which constrain higher degree of trade specialization.

Exploiting the Trade Potential from Integration: Analysing the Impact of Free Trade Agreements between ASEAN and India and China

In this article, we use the technique of stochastic frontier estimation for the structural gravity model to analyse Vietnam’s bilateral trade and evaluate its exploitation of trade efficiency before and after its free trade agreements (FTAs) with China and India entered into force. The results from Vietnam’s bilateral trade data between 2000 and 2015 show that the ASEAN–India Free Trade Agreement (AIFTA) has had a positive impact on Vietnam’s bilateral trade flows while we found a remarkably negative effect on Vietnam’s exports but not imports after the entry into force of the ASEAN-China Free Trade Agreement (ACFTA). In addition, Vietnam’s participation in the regional trade agreements (RTAs) and FTAs has significantly reduced the costs of trade over time, and these impacts on Vietnam’s imports are much higher than those on Vietnam's exports.

ASEAN-India Free Trade Agreement: Evaluating Trade Creation and Trade Diversion Effects

ABSTRACTThe present study attempts to provide insight into the trade creation and trade diversion effects of ASEAN-India Free Trade Agreement in goods, which came into force in 2010. The paper applies a theoretically consistent gravity model and uses empirically robust procedures such as ordinary least squares and pseudo-Poisson maximum likelihood in order to analyze the ex post effects of the agreement at an aggregate level. The results reveal that standard gravity variables are statistically significant and report expected signs, yet a reduction in export flows has been observed following the implementation of the free trade agreement, giving rise to pure trade diversion effects.

Impact of ASEAN India Free Trade Agreement (AIFTA) on India's HS-85 (Electrical Goods) Exports

The trade agreement in goods between India and ASEAN became operational in January, 2010. The paper attempts an enquiry into the Tariff concession given to India by the ASEAN countries in the electrical goods sector and also attempts to identify product lines at HS 4 levels sub segments in the same where there could be possibility for the exports to increase due to tariff cuts in the significant product categories as the two regions become more important trading partners in times to come. The paper will also give an overview of the tariff cuts in the identified tariff lines given by the ASEAN nations to India.

ASEAN-India Free Trade Agreement in Goods: An Assessment

The study investigates India’s trade prospect with ASEAN countries by analyzing the pattern and trends in India’s bilateral merchandise trade with ASEAN countries and their revealed comparative advantage in different products. The results show that during last three decades India’s share in ASEAN countries’ merchandise trade has increased, but it has been less than that of Japan and China. This shift has been more marked in the case of imports. India runs a large and worsening trade deficit vis-a-vis ASEAN countries. India’s ratio of trade deficit to total foreign trade has had been worst in case of its trade with ASEAN countries. India’s trade intensity in ASEAN countries has deteriorated sharply. ASEAN economies are more open in caparison of Indian economy. Lafay’s index results suggest that India’s comparative advantage is rather poor than ASEAN countries. In addition, in India many specialization improvements occur in those items for which the world demand expands at a faster pace, hinting to the possibility of an increase in India’s share in the world trade in the years to come. In order to enlarge international trade benefits, India should pay attention to pave the way for concluding the multilateral trade liberalization under WTO’s Doha round trade negotiations.

Impact of ASEAN-India free trade agreement on Indian dairy trade: A simulation analysis

The study attempts a quantitative assessment of the impact of recently signed ASEAN-India FTA (AIFTA) for dairy commodities in India. ASEAN is strategically a potential market in dairy for India and our country already stands as net exporter of dairy products in this region. Partial equilibrium model (SMART model) has been used to simulate the likely impact of dairy exports to and imports from ASEAN countries under the proposed tariff reduction schedule of the AIFTA. The SMART model simulations suggest that AIFTA has generated an additional scope for India to increase its dairy exports to ASEAN countries. On the other hand, tariff elimination from India's side creates little scope for ASEAN nations to expand their shares. The threat of cheap imports competing with the domestic products in the Indian markets is therefore not alarming. However necessary adjustment assistance may be provided to the dairy product manufacturers to counter the competition in the relevant product lines.

Developments in India’s Bilateral Trade with ASEAN: A Study in Manufactured Sectors

The present paper deals with the impact of the recently signed ASEAN-India Free Trade Agreement (FTA) on manufactured goods. Partial equilibrium model approach (SMART model) has been employed to find out trade creation and diversion values of those goods in respective markets (India as well as ASEAN). In this paper, a new index has been constructed to embody score of India and two ASEAN groups using values of trade creation and diversion.

ASEAN–India Free Trade Agreement (FTA) and its Impact on India

The ASEAN–India Free Trade Agreement (FTA) has brought opportunities as well as challenges to the Indian industry since it came into force on 1 January 2010. There is no clear-cut estimates about the gains which will come to India especially in the sectors of agriculture, plantation and fisheries. However, some of the sectors which are labour intensive or unorganized will be facing bigger challenges. This article attempts to examine the impact of FTA where the tariff is either reduced or eliminated on some of the agricultural products like fisheries, tea and coffee, which have been projected as sensitive for India. The commitment of India and ASEAN under the FTA is analyzed along with the trade and tariff data. While doing so the article looks at some of the empirical evidence to examine the impact of India’s unilateral tariff liberalization in the Post-Uruguay Round by taking into consideration India’s imports, domestic production, etc. These results are then extrapolated to examine the impact of tariff liberalization on the domestic economy in view of India’s commitment in the ASEAN–India FTA. The study is divided into three parts. The first part deals with the history of India–ASEAN relationship and highlights the features of India–ASEAN FTA. The second part does a case study of fisheries, tea and coffee with regard to FTA and likely impact on India. The final part gives a broad conclusion of the study. The study first looks at the bilateral trade data and then highlights the salient features of India–ASEAN FTA. It then reviews some of the literary works that have been carried out in this regard. The study thereafter looks at the historical trends of production, prices, trade values and tariffs on identified items at a national level as well as the items in India’s tariff liberalization programme (TLP). In the next section, while identifying the position, it also examines the position of these items in ASEAN’s TLP so as to assess whether Indian producers will get equal opportunities for preferential market access there or not. A comparison of the unit value price of Indian producers as well ASEAN members has been made to look at their respective competitiveness not only in the international markets but in each others’ market as well. The study gives its finding at the end summarizing the threats and the opportunities for Indian producers.

The India–Singapore Comprehensive Economic Co‑operation Agreement (CECA):: A Good Beginning Towards an Enduring Economic Relationship

Introduction The past decade has witnessed a significant expansion in bilateral economic relations between Singapore and India. Thus, while the total bilateral merchandise trade between the two countries trebled during 1991-2002, reaching US$4.20 billion, the bilateral services trade increased by 40 per cent from 1998 to US$0.74 billion in 2000. These trade flows have also been accompanied by increasing volume of foreign investments, with Singapore emerging as the eighth largest foreign investor in India as of 2002 (Joint Study Group [JSG] 2003). These investments have covered a wide range of sectors from telecommunications, electrical equipments, electronics, health care, and real estate, to port development, trade logistics, tourism, and transportation. These economic linkages have been further strengthened by the development of institutional links particularly between the trade, investment, and tourism promotion agencies of the two countries. (1) With increasing economic and institutional linkages between Singapore and India, it has been recognized by the policy-makers from both sides that there needs to be a sustained effort to concretize this relationship. Thus, during the visit of the Indian Prime Minister Shri Atal Bihari Vajpayee to Singapore in April 2002, it was proposed that a JSG be set up to explore the areas of mutual economic co-operation. This was believed to be the first step for both countries to seriously consider a closer economic partnership through a Regional Trade Agreement (RTA). The JSG has since completed its report and during the recent visit of the Singapore Prime Minister Goh Chok Tong to India in April 2003, a declaration of intent to conclude a Comprehensive Economic Co-operation Agreement (CECA) between India and Singapore within a time span of twelve to eighteen months has been signed. It is important to note that this visit took place under the shadow of an outbreak of the Severe Acute Respiratory Syndrome (SARS) in several countries across Asia, signifying willingness of both countries to forge an enduring long-term relationship. It has been agreed that the recommendations of the JSG report on the India-Singapore CECA, released during PM Goh's visit to India, could serve as a basis for detailed negotiations. This declaration thus represents another step forward in operationalizing India's Look East Policy. Upon signing, the CECA with India would represent the first such bilateral arrangement that Singapore has entered into with a developing country, and India's first such agreement with a high-income, affluent country, and thus assumes significance. It is important to note that India already has a functional Free Trade Agreement (FTA) with Sri Lanka and is in the process of negotiating such arrangements with Thailand, Brazil, and Chile. Thus, India's experience with such agreements with two members of ASEAN--Singapore and Thailand--can be expected to ease negotiations for a prospective ASEAN-India Free Trade Agreement. This article analyses the recommendations of the JSG report in the context of the proposed India-Singapore CECA and its implications for India-Singapore economic relations. It analyses some key recommendations of the JSG report and implications of the proposed CECA for regionalism in Asia. The article concludes with some cautionary notes on the CECA. Key Recommendations of the JSG Report on India-Singapore CECA and Its Implications (2) The JSG Report on India-Singapore CECA has recommended that the CECA be an FTA-plus arrangement. This implies that negotiations would go beyond tariff reduction on merchandise trade into other areas of trade negotiations, viz., services, investments, standards, and movement of natural persons. Specifically, the JSG has recommended that the CECA should be an integrated package of agreements comprising of the following major components, each of whom is individually discussed below: FTA on Merchandise and Services Trade The JSG report has recommended that the FTA, being part of the CECA, would be comprehensive and would not be limited to tariff reductions in merchandise trade. …