Economic integration with ASEAN is the litmus test of India's Act East Policy. Evaluate.
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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
- 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
- 215th Meeting of AITIGA Joint Committee held during 6–9 October 2026, PIBpending chapters, "firm, time-bound deliverables", "balanced, constructive and forward-looking" framework
- 32024 Year End Review for Department of Commerce, PIB"inequitable tariff liberalization", "injury to industries", 2025 target for substantial conclusion
- 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
- 5India Hosts 13th ASEAN-India Trade in Goods Agreement Joint Committee Meeting, PIBUSD 128 bn trade in FY 2025-26