
The anticipated overhaul of the 14-year-old India-ASEAN Trade in Goods Agreement (ATIGA) is facing unexpected delays, potentially impacting the Indian textile industry. Originally slated for finalization at next month’s Jakarta meeting, the review has hit a roadblock due to ASEAN members’ preference for individual tariff negotiations, rather than India’s proposed unified duty structure.
This development raises concerns for Indian textile manufacturers who are already navigating a complex global trade landscape. While the ATIGA has fostered stronger economic ties between India and the Southeast Asian bloc, the current impasse highlights differing priorities.
Sources familiar with the matter indicate that India is particularly keen to reassess tariff concessions, especially those benefiting Vietnam. These concessions currently allow duty-free imports of mobile phone components into India. However, this focus on mobile phone components indirectly affects the textile sector, as it highlights India’s broader strategy of protecting domestic manufacturing. A similar approach could be applied to textile imports in the future, depending on the outcome of the ATIGA review.
The ASEAN bloc, comprising Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam, presents a significant market for Indian textiles. However, trade is largely concentrated with Indonesia, Singapore, Malaysia, Thailand, and Vietnam. The lack of a common external tariff within ASEAN, as it is not a customs union, further complicates matters. Each member nation maintains its own tariff structure, making a unified agreement challenging. This divergence has led to demands for separate negotiations, mirroring previous trade discussions.
This fragmented approach could prolong the review process, creating uncertainty for Indian textile exporters seeking to capitalize on the ASEAN market. While the review aims to enhance trade facilitation and maximize benefits for businesses, the current stalemate could hinder progress. Experts suggest that the initial target of concluding discussions by February is unlikely to be met, with dialogues expected to continue for longer as each ASEAN member pursues its specific interests.
The delay in finalizing the ATIGA review underscores the complexities of international trade negotiations and the need for careful consideration of industry-specific impacts, including the textile sector. The outcome of these negotiations will significantly shape the future of trade relations between India and ASEAN, with potential ramifications for textile manufacturers and exporters on both sides.