India Ties with ASEAN

India's ASEAN Engagement: A Strategic Imperative or Missed Opportunity?

India’s wavering commitment to deepening ties with ASEAN signals a broader inconsistency in its foreign policy toward regional cooperation. While the government celebrates bilateral trade figures and defense agreements, its reluctance to integrate into multilateral platforms like the Regional Comprehensive Economic Partnership (RCEP) casts serious doubt on its long-term strategic alignment in Asia. ASEAN offers India a critical gateway for connectivity and trade, yet India’s protectionist tendencies risk undermining these opportunities, leaving openings for China to dominate the region economically and geopolitically.

The Institutional Landscape: Legal Framework and Regional Agreements

ASEAN operates under the ASEAN Charter, a legal and institutional framework ensuring economic cohesion among its 10 member nations (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam). The ASEAN-India Trade in Goods Agreement (AITIGA), signed in 2009, was meant to bolster trade but has instead exacerbated India’s trade deficit, which ballooned from $5 billion in 2010–11 to over $44 billion in 2024–25. While India offered duty concessions on 71% of tariff lines, reciprocal concessions from nations like Indonesia (41%) and Vietnam (66.5%) fell significantly short. Additionally, gaps in rules of origin enforcement have allowed Chinese goods to flow into India via ASEAN, nullifying FTA advantages and weakening domestic manufacturing.

The Regional Comprehensive Economic Partnership (RCEP), ASEAN’s crown jewel for economic integration, brings together 15 countries including China, South Korea, Australia, and New Zealand, creating a trade bloc worth $26 trillion. India withdrew from RCEP negotiations in 2019, citing fears over trade deficits and domestic industry vulnerabilities, yet this decision signaled a retreat from multilateralism in favor of insular trade policies.

Trade Data and Strategic Concerns: Evidence of Underperformance

India’s bilateral trade with ASEAN reached $122.67 billion in 2023–24, accounting for 11% of India’s global trade. However, this numerical growth masks structural inefficiencies. Singapore alone contributed over $35 billion, underscoring limited diversification in trade across the bloc. The review of AITIGA, aimed at addressing these imbalances, has been delayed due to ASEAN's reluctance to renegotiate terms. Connectivity projects, such as the India-Myanmar-Thailand Trilateral Highway, remain mired in bureaucratic delays and regional instability caused by Myanmar’s military junta.

Maritime cooperation has seen progress, with joint naval exercises bolstering India’s strategic presence in a region increasingly influenced by China. The BrahMos missile exports to the Philippines and bilateral defense dialogues mark critical trust-building steps. Yet, India’s approach often prioritizes bilateral engagements over a unified ASEAN strategy, diluting the collective coherence of its outreach.

Institutional Critique: Trade Stagnation and Geopolitical Ambiguity

The Ministry of Commerce’s narrative celebrating trade volumes fails to account for skewed benefits. The National Sample Survey Office’s data shows declining competitiveness in sectors like textiles and electronics, where tariff asymmetries favor ASEAN exporters. India’s protectionist alarmism over rules of origin risks alienating ASEAN without addressing core domestic inefficiencies.

Diplomatically, India finds itself at odds on issues like the South China Sea. While ASEAN balances its cautious stance on Chinese militarization, India’s membership in the Quad and support for a rules-based Indo-Pacific create conflicting strategic signals. Such ambiguities are exacerbated by delays in regional initiatives like the Kaladan Multimodal Transit Project, which remains non-operational due to infrastructural and geopolitical bottlenecks.

Counter-Narrative: Is Protectionism Pragmatic?

Proponents of India’s cautious trade policies argue that RCEP’s asymmetrical tariff demands would have flooded Indian markets with cheap imports, particularly from China. The withdrawal in 2019 was posited as safeguarding vulnerable industries like agriculture and MSMEs, which could face irreparable harm from free trade excesses. Additionally, bilateral engagement with ASEAN members allows India to prioritize nations most aligned with its strategic and economic goals.

However, the structural flaws in this argument lie in its short-termism. The protectionist approach does little to enhance internal competitiveness, nor does it address India’s declining export share in global value chains. In effect, this risks long-term economic marginalization from an increasingly integrated Asia-Pacific landscape.

International Perspective: Vietnam’s Multilateral Path

India’s cautious stance contrasts sharply with Vietnam, an ASEAN nation leveraging multilateralism to boost its economy. Vietnam’s participation in RCEP alongside its Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) membership has enabled it to diversify trade while strengthening domestic industries through global standards. What India shuns as tariff risks, Vietnam embraces as opportunities for industrial modernization. Vietnam’s approach exemplifies how multilateral agreements can be harnessed to enhance competitiveness without surrendering economic sovereignty.

Assessment and Path Forward

India’s commitment to ASEAN centrality must be matched by structural reforms in trade policy and infrastructure development. Revisiting the AITIGA agreement to ensure equitable tariff structures is a necessary first step, alongside stringent enforcement of rules of origin to curb rerouting of Chinese imports. Bilateral agreements with high-value ASEAN economies like Singapore and Vietnam could also serve as interim measures to reinvigorate stagnant frameworks.

Domestically, India needs to modernize its MSME ecosystem, incentivize export-oriented industries through tax reliefs, and prioritize digital trade frameworks. Enhancing regional projects like the Trilateral Highway and accelerating cultural diplomacy through initiatives like the ASEAN-India Year of Tourism 2025 could help balance economic and strategic imperatives.

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