The Financial Express - 08 February 2026
India seeking higher product coverage in Asean-India FTA
India’s aim is to liberalise trade in 80% of the tariff lines and product-specific Rules of Origin in the review of Asean India Trade in Goods Agreement (AITIGA) which it hopes will conclude in the next few months, a senior official said Sunday.
“Our broad objective is to overall achieve liberalisation of trade in 80% tariff lines. At every country level minimum 70% tariff line liberalisation should be achieved. The discussions are on,” Secretary (East) in the Ministry of External Affairs P Kumaran said.
Addressing reporters on the visit of Prime Minister Narendra Modi to Malaysia, he said for the Least Developed Countries (LDC) in ASEAN concessions could be given concessions like on tariff liberalisation and the time given for liberalisation from 70% to 80% tariff lines.
The discussions are also focussing on how to improve Rules of Origin (ROO) by making them product-specific. At present the AITIGA has a provision of a uniform 35% local value addition requirement across all product categories to qualify for trade on preferential duties.
Rebalancing Trade
Malaysia chairs the AITIGA negotiations from the ASEAN side. AITIGA came into effect in January 2010. In 2009–10, India’s exports to Asean stood at $18.11 billion and imports at $25.79 billion. By 2024–25, exports grew to $38.96 billion, but imports ballooned to $84.15 billion. India is seeking to address the deficit and market access issues in the review. The review started in 2021 after Asean finally agreed to the review in 2019.
Product specific ROO will make more products eligible for trade on concessional tariffs. It will open markets for newer items like electronics where global supply chains are diversified and local value addition is low in percentage terms.
Beyond International Trade
AITIGA covers the liberalization of over 90% of total tariff lines traded between the two sides. Out of approximately 12,169 tariff lines, roughly 10,872 lines have seen some form of tariff reduction or elimination. The liberalization varies by country. While those like Singapore and Malaysia have high liberalization rates, others like Vietnam and Myanmar are at lower levels.
In a joint statement at the conclusion of Modi’s visit said both sides appreciated the continued collaboration between Reserve Bank of India (RBI) and Bank Negara Malaysia to promote usage of local currency settlement in bilateral trade and investments. They also encouraged industries on both sides to further facilitate the invoicing and settlement of trade in local currencies,: Indian Rupee and Malaysian Ringgit.
“This is still being discussed. It is a matter of priority, Both the PMs took the opportunity to express their support for this. We will be working very actively in coming months to have this operationalised,” Kumaran said.
India has established mechanisms to trade in local currency with 22 countries on the basis of the RBI framework launched in July 2022. The entire India-Russia bilateral trade is now settled in national currencies.
The joint statement also welcomed collaboration between NPCI International Limited (NIPL) and PayNet Malaysia to establish bilateral payment linkages.
“UPI linkage is something we have been discussing for a while. The main purpose is to help tourists and enable workers to send their remittances,” the secretary said
UPI is fully operational in Singapore, UAE, Qatar, Bhutan, Sri Lanka, Mauritius and France. Beyond point to point connectivity between two countries on payment mechanism, India is also working with partners to link payment systems of multiple countries in Southeast Asia including Singapore and Malaysia that would give direct connectivity from one country to all the other countries. This will enable cross-border payments through QR codes and is part of the Project Nexus, Kumaran said. “This is some distance away.”
