Qualitative study of India's FTA with ASEAN

Abstract

India announced its “Look East” policy in 1991 in an attempt to increase its engagement with the East Asian countries. The ASEAN-India Free Trade Area in goods emerged from a mutual interest to expand their economic ties in the Asia-Pacific region. Much of India's trade with ASEAN is directed towards Singapore, Malaysia, and Thailand, with whom India holds strong economic relations. The benefits of free trade area mainly depend on the complementary nature of the trade between the countries. In a group of countries or regions which have a similar structure of production of commodity and exports, theoretically only countries which have the lowest cost of production will gain in trading. It is argued that allocative efficiency increases as a result of free trade and it improves productivity in the export-oriented sectors as well as achieves economies of scale. In light of this, this proposed work seeks to analyze and compare the long-term benefits accruing out of this FTA with ASEAN to India.