Trade Relation Between India and ASEAN

India holds strong and significant economic relationship with many countries in the world. Since the nineties, India has opened up its trading doors and formed a bilateral trading structure with the rest of the world economy. The United States, United Kingdom, Japan and China are amongst the top trading partners of India. As reported by the Ministry of Commerce and Industry, the total trade by India’s fifteen largest trading partners accumulates to 59.37% as of 2015-2016. Traded mostly in goods and commodities, excluding Foreign Direct Investment(FDI). China holds the top rank with total trade of US$84.4 billion followed by the United States at US$67.70 billion. A significant treaty worth mentioning is India’s trade relationship with the Association of South East Asian Nations also known as ASEAN.


The Framework Agreement on Comprehensive Economic Cooperation between India and the Association of South East Asian Nations was signed on 8th October 2003. The ASEAN Nations and India together consist of the largest economic regions. ASEAN is India’s fourth largest trading partner accounting for India’s 10.2 % trade share.  After India became a sectoral dialogue partner of ASEAN in 1992, India saw its trade increase with ASEAN relative to the rest of the world. Between 1993 and 2003, ASEAN-India bilateral trade grew at an annual rate of 11.2%. Much of India’s trade with ASEAN is directed towards Singapore, Malaysia and Thailand, with whom India holds strong economic relation.

The ASEAN-India economic integration process gathered impetus after the creation of the ASEAN-India free trade area in 2010. This was followed by the implementation of the India-ASEAN agreement on services and investment in 2015. Both the parties entered into negotiations that, restrictive regulations under commerce(except for those permitted under WTO’s General Agreement on Trade and Tariffs ) would be eliminated on literally all trade between the two parties.

This agreement comes as a highly anticipated step towards economic development and international integration for Indian business traders. With 0% tariff rates in almost all goods, India ASEAN Free Trade Agreement(FTA) movement can be considered as a right move by the Indian Government. However, both parties need to overcome several existing structural blocks before attaining a smooth trading process.


The trading countries have a different level of socio-economic conditions, thus posing a complex challenge especially to the SME’s. The lack of sufficient resources makes them vulnerable and a victim of the R&D of the trading countries, especially India. This makes them highly dependent on foreign technologies. Until very recently, SME’s were subject to ineffective physical connectivity bureaucratic costs involved in complex tax and duty structures, licensing, and other business activities. This impeded the flow of the SME’s and restricted their development to their true potential. Moreover, the CLVT countries—Cambodia, Laos, Vietnam and Thailand—are emerging as the manufacturing hotspots, with China increasingly outsourcing its production to these countries.  Further, Chinese e-commerce retailers like Sunning have committed to promoting ASEAN SMEs. Thus, the dominant Chinese footprint in the region makes the competition tougher for Indian SMEs.


India with its largely skilled and yet untapped, unexplored demographic dividend, has the potential to develop the logistics sector and the supply-chain environment to a world-class level.  Regional value chains are a great pathway to connect to the global value chain. Hence there’s huge potential to create value chains between the manufacturers of SMEs in India and those in the less developed countries.  ASEAN bloc, like Laos, Vietnam, Cambodia and Myanmar, considering that these countries are the beneficiaries of the generalised system of preferences in the US and the EU. Which creates a trickle-up effect, benefitting all. SME’s contribute to about 45% of the Indian Manufacturing and hence is pivotal to both India and ASEAN countries.


With recent developments in cloud services and AI, there has been an uprising in the power of SME’s, projecting such technologies in their way of work. With central storage and Cloud Computing, the paperwork involved in the trading process has been substantially reduced, along with the number of people involved in the trade. India being a developing nation, has an advantage over the foreign traders offering Cloud Services using blockchain, by offering trading services at lower costs. Even though SME’s do not have the back up of the big-conglomerates, they have constantly challenged these big companies with their new business techniques, valued resources and better competitive prices. With the help of Cloud Computing, SME’s are able to break the monotonous routine of involving hundreds of men in the trading process using advanced invoice techniques. Better security and accessibility to all, help these SME’s earn their traders trust and evolve in their trading process. Expostores are constantly innovating on ways to improve cross border trade. 9thRoute  provides Cloud Services and AI for trade, thus reducing costs for their SME & Enterprise trading clients and at the same time, delivering the same goods quality as any high-end trading company.

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