·PIB·15 marks·250–350 words

Economic integration with ASEAN is the litmus test of India's Act East Policy. Evaluate.

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In this answer
  1. Why economic integration is a fair test
  2. Where the test exposes weaknesses
  3. Why trade is not the only test

ASEAN was India's second-largest trading partner in 2022-23 and 2023-24 [1], which makes trade the most measurable result of the Act East Policy. Economic integration is a necessary test of the policy, but it is not the only test.

Why economic integration is a fair test

  • Legal depth: The 2003 Framework Agreement led to AITIGA (in force from 2010). The Services and Investment agreements followed in 2014 [1].
  • Scale: Bilateral trade reached USD 128 bn in FY 2025-26 [5]. ASEAN invested USD 156 bn of FDI in India over 2000–2023 [1].
  • Political priority: The AITIGA review is now the main agenda of the AEM–India Consultations [1].

Where the test exposes weaknesses

  • Widening deficit: The deficit grew from USD −5.41 bn (2011-12) to USD −45.20 bn (2024-25), while exports stayed flat at about USD 39–44 bn [1]. Part of this reflects weak Indian competitiveness, not only the agreement's design.
  • Design flaws admitted: The Department of Commerce cites "inequitable tariff liberalization" and "injury to industries" [3].
  • Routing of third-country goods: India had to act on its own through CAROTAR, 2020 to curb misuse of FTAs [4].
  • Slow review: Talks aimed at a "substantial conclusion" by 2025 [3]. Yet in October 2026 the 15th Joint Committee was still pressing for "firm, time-bound deliverables" on pending chapters [2].

Why trade is not the only test

  • Strategic upgrade: The relationship became a Strategic Partnership (2012) and then a Comprehensive Strategic Partnership (2022) despite the trade imbalance [1].
  • Wider pillars: India's engagement also rests on the Indo-Pacific Oceans Initiative and on physical and digital connectivity [1]. These are security and maritime goals that a trade balance cannot measure.

Verdict: Economic integration is the most visible test of Act East, but strategic and connectivity gains mean it is not the only one.

The record is mixed: diplomatic and investment ties have deepened, but trade gains remain lopsided. The way forward is to rewrite the Rules of Origin chapter, remove non-tariff barriers, have ministers settle the tariff asymmetry, and judge success by export growth. A "balanced, constructive and forward-looking" AITIGA [2] would let trade strengthen Act East instead of weakening it, in line with SDG 17's goal of fair, rules-based trade.

Sources

  1. 1Brief on India–ASEAN Relations, Ministry of External Affairs (July 2025)trading-partner rank, agreement timeline, FDI, AEM agenda, deficit and export data, 2012/2022 partnerships, IPOI and connectivity
  2. 215th Meeting of AITIGA Joint Committee held during 6–9 October 2026, PIBpending chapters, "firm, time-bound deliverables", "balanced, constructive and forward-looking" framework
  3. 32024 Year End Review for Department of Commerce, PIB"inequitable tariff liberalization", "injury to industries", 2025 target for substantial conclusion
  4. 4Implementation of the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 with effect from 21st September 2020, PIBCAROTAR to curb FTA misuse
  5. 5India Hosts 13th ASEAN-India Trade in Goods Agreement Joint Committee Meeting, PIBUSD 128 bn trade in FY 2025-26

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