India has concluded almost a dozen free trade agreements since the turn of the millennium. Though the early agreements were the immediate neighbours the country has gradually extended the partnerships to more distant nations including the Association of South East Nations (Asean), South Korea and Japan. One of the earliest FTA treaties India had signed with the far off economies in the Far East, and probably the most controversial, was the one with the ten Asean countries.
However, the jury is still out on the overall impact of the India Asean FTA. But a cursory investigation show that the overall impact on the FTA on boosting the trade relation between the two partners have been only marginal. Though the overall figures are impressive with total trade surging from $ 43.9 billion in 2009-10 to $ 65 billion in 2015-16 the relative gains does not seem too significant.
This is because number show that though India’s exports to Asean went up significantly in the initial years from $ 18.1 billion in 2009-10 $ 33.1 billion in 2013-14 it swiftly fell back to $ 25.1 billion in 2015-16, a little lower than the exports level achieved after the first year of the free trade treaty. In percentage terms also the numbers show that the share of Indians export to Asean went up from 10.1% in 2009-10 to 16.9% by 2012-13 it has subsequently slipped to 9.5% by 2015-16, a level lower than at the start of the FTA.
To add tot eh problems the Indian imports from Asean has steadily surged with the absolute value of imports going up from $ 25.7 billion in 2009-10 to $ 44.7 billion in 2014-15 after which it fell to $ 39.9 billion in the very next year. In relative terms the share of Indian imports from Asean has steadily gone up from 8.6% to 10.4% during the period.
However, the overall impact has been marginal with the share of India Asean total trade creeping up only marginally from 9.4% to 10.1%, an addition of less than a percentage points over the last six years. The trends in the trade deficits are also not very positive as the numbers have surged up from $7.6 billion in 2009-10 to $14.7 billion in 2015-16. In fact the share of the trade deficit with Asean in India’s total trade deficit has surged up from 7% to 12.3% over the period. Overall one can safely say that while the share of India trade with Asean has gone up marginally the share of trade deficit has bloated disproportionately higher putting a big question mark on the gains that the FTA has bestowed on the partner countries.