ASEAN-India Trade in Goods Agreement (AITIGA)

The ASEAN-India Trade in Goods Agreement, or AITIGA, is a trade deal between India and the countries of ASEAN (the Association of Southeast Asian Nations). Under it, both sides cut or remove the import taxes, called tariffs, on most goods they buy from each other. It was signed in 2009 and is the "goods" part of the wider ASEAN-India Free Trade Area. Since 2023, both sides have been reviewing it to update it.

Why was it signed?

In the early 1990s India began its "Look East" policy to build closer economic ties with fast-growing Southeast Asia. A trade deal was the natural next step. India hoped cheaper inputs, bigger markets and closer supply chains would help its industry, and that the deal would deepen its strategic presence in the region.

Where did it come from?

The steps came one after another:

• 2003: India and ASEAN signed a Framework Agreement on Comprehensive Economic Cooperation in Bali. This set the plan for trade in goods, services and investment.
• 13 August 2009: AITIGA was signed in Bangkok after about six years of talks.
• 1 January 2010: It came into force for India and the first group of ASEAN countries (Malaysia, Singapore and Thailand). Other members joined over the next months as they completed their own approval.
• November 2014: Separate ASEAN-India agreements on trade in services and on investment were signed. Both came into force on 1 July 2015. Together with AITIGA, they make up the full ASEAN-India Free Trade Area.

How does the tariff cutting work?

Not all goods are treated the same. Each country put its products into "tracks":

• Normal Track: Tariffs are cut step by step and then removed fully (split into Normal Track 1 and Normal Track 2, with different deadlines).
• Sensitive Track: Tariffs are reduced but not removed, usually to a low level such as 5%.
• Special Products (India): Crude palm oil, refined palm oil, coffee, black tea and pepper got their own slower reduction schedule, because many Indian farmers grow them.
• Highly Sensitive List: Used by some ASEAN countries for items they protect strongly; tariffs are only partly reduced.
• Exclusion List: Products kept out of tariff cuts altogether. India excluded several hundred tariff lines (often cited as 489), mostly farm goods, to protect farmers.

How does a product qualify for the low tariff?

A good gets the AITIGA tariff only if it is truly "made" in an ASEAN country or India. This test is called the rule of origin. Under AITIGA, a product generally qualifies if at least 35% of its value is added locally (measured on its FOB value) and it has gone through enough processing to change its customs classification at the "subheading" level (called a change in tariff subheading). The agreement's rules of origin sit in Article 7 and Annex 2.

How is the agreement managed?

A Joint Committee of officials from India and all ASEAN countries oversees it. For the review, the Joint Committee works through eight sub-committees, each handling one area (such as market access, rules of origin, customs procedures and trade remedies). The Joint Committee meets several times a year and sets deadlines for them.

Why is India reviewing it?

India's trade with ASEAN has grown, but imports have grown much faster than exports. The trade deficit has widened from a small gap in the early years of the deal to over $50 billion a year by the mid-2020s. Indian industry gives three main reasons:

• Asymmetric tariff cuts: India cut tariffs on many items to zero, while some ASEAN members kept tariffs or took longer.
• Routing of third-country goods: Goods made mostly in a non-member country (often China) could get a small amount of processing in an ASEAN country and enter India at zero duty. Weak checking of origin made this easier.
• Non-tariff barriers: Product standards, licences and inspection rules in some ASEAN markets make it hard for Indian exporters even when tariffs are low.

The review timeline

In 2022 the two sides agreed to review AITIGA to make it "more user-friendly, simple and trade facilitative". The Joint Committee began the review in May 2023, fixed its terms of reference and structure in its first two meetings, and launched formal negotiations at its third meeting in New Delhi in February 2024. The original target to finish in 2025 slipped, and talks have continued through 2026.

India's position and wider links

AITIGA is a central pillar of India's Act East Policy and its Comprehensive Strategic Partnership with ASEAN (2022). India also has separate deals with some ASEAN members: the India-Singapore Comprehensive Economic Cooperation Agreement (CECA, 2005) and the India-Malaysia CECA (2011). India chose not to join the Regional Comprehensive Economic Partnership (RCEP), a larger deal of ASEAN with China, Japan, South Korea, Australia and New Zealand.

India pulled out in November 2019, citing concerns about a surge of Chinese imports and weak safeguards. So AITIGA remains India's main trade link with ASEAN as a group.

Commonly confused concepts

• AITIGA vs ATIGA: AITIGA is the ASEAN-India agreement (2009). ATIGA (ASEAN Trade in Goods Agreement) is ASEAN's internal deal among its own members.
• AITIGA vs RCEP: AITIGA is between India and ASEAN only. RCEP has ASEAN plus five partners; India is not a member.
• FTA vs CEPA/CECA: An FTA mainly cuts tariffs on goods. A CEPA or CECA is broader and usually also covers services, investment and other areas. The ASEAN-India package became "comprehensive" only after the 2014 services and investment deals were added.
• Trade deficit vs FTA failure: A deficit alone does not prove an FTA has failed. Much of India's imports from ASEAN are inputs (like palm oil, coal, electronic parts) that feed Indian industry.

Issues, criticism and the way forward

• Low use of the deal: Many Indian exporters do not use AITIGA benefits because the paperwork and origin proof are costly, especially for small firms.
• Origin cheating: India wants product-specific rules of origin and stronger verification. India's Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 (CAROTAR) already put more duty on importers to prove origin.
• ASEAN's view: ASEAN members want India to cut tariffs further, ease customs, and treat the review as a chance to expand trade, not restrict it. Reaching agreement needs consensus among all ASEAN members.
• Way forward: Experts suggest a balanced package: clearer and checkable rules of origin, tackling non-tariff barriers, simpler procedures for small firms, and new chapters on modern trade issues like digital trade and supply chains. Finishing the review quickly matters, because long uncertainty hurts businesses on both sides.

Concepts to Know

• Tariff: A tax on imported goods. A 10% tariff on a ₹100 import makes it cost ₹110 at the border.
• Tariff line: One specific product in a country's customs list, identified by a code. A deal is often measured by how many tariff lines it covers.
• Trade deficit: When a country buys (imports) more from another country than it sells (exports) to it.
• FOB (Free on Board) value: The value of a good when it is loaded on the ship for export, before freight and insurance are added.
• Change in tariff subheading: A test that checks whether a product was processed enough that its customs code (at the 6-digit level) changed. For example, raw cotton becoming yarn.
• Non-tariff barriers: Rules other than taxes that make imports harder, such as strict quality standards, licences or long inspections.