Chinese dumping and ASEAN acting as China’s ‘B team’ may be defeating the purpose of the Free Trade Pact
Of late, ASEAN has emerged as a powerful economic bloc, and it was quite natural and prudent on the part of India to enter into a trade agreement. However, sometimes seemingly good relations are soured by bad intentions. Though it was a win-win situation for both parties, of late — as the former Commerce Minister Piyush Goyal rightly termed it — ASEAN has started acting as the ‘B team’ of China, acting like a proxy and routing Chinese goods through the FTA.
India is at a critical juncture in its trade engagement with the Association of Southeast Asian Nations (ASEAN). As frustrations mount over an imbalanced Free Trade Agreement (FTA) that has enabled the backdoor influx of Chinese goods and hollowed out domestic industry, New Delhi is now considering a bold move — to walk away.
After over two years of review negotiations that have yielded little progress, the time for reassessment has come. India’s next steps will determine whether it reclaims control over its trade ecosystem or continues under a deal many view as economically exploitative and strategically compromising.
The ASEAN-India Trade in Goods Agreement (AITIGA), signed in 2009 and implemented from January 1, 2010, was initially heralded as a breakthrough in regional trade cooperation. ASEAN, comprising Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam, was expected to provide a dynamic market for Indian exports while deepening strategic regional integration. However, as the years unfolded, it became increasingly clear that the agreement was lopsided — offering limited benefits to India but opening a floodgate of imports, many of which were thinly veiled Chinese products using ASEAN countries as transit hubs to bypass Indian tariffs.
At the heart of the problem lies the weak “rules of origin” (ROO) clause, which failed to effectively prevent third-country goods —especially from China — from being dumped into India via ASEAN. The consequences were dire: India’s trade deficit with ASEAN ballooned from $5 billion in 2010–11 to $43.57 billion in 2022–23. The China Factor India’s strategic discomfort with the ASEAN FTA cannot be separated from its growing rivalry with China. ASEAN nations —particularly Cambodia, Vietnam, and Indonesia — have become proxies for Chinese exports.
These countries benefit from duty-free access to Indian markets under the FTA, while India struggles to export competitively due to internal regulatory bottlenecks, substandard reciprocal commitments, and even non-tariff barriers imposed by some ASEAN members. India initiated the first review of the FTA in May 2023, but nine rounds later, there is little to show. Officials allege that ASEAN members are deliberately delaying progress, capitalising on the agreement’s current structure which disproportionately benefits them.
The upcoming 10th round of talks, expected in mid-August 2025 in New Delhi, could be a make-or-break moment. India’s decision on ASEAN will reverberate far beyond trade. It is a litmus test of whether the country is willing to defend its economic sovereignty and align trade policy with strategic realities.
