Malaysia-India Diplomacy Could Ease Asean Tariff Hurdle

By Vijian Paramasivam

PHNOM PENH, Feb 6 (Bernama)  -- India can significantly leverage Malaysia's ASEAN chairmanship to resolve trade barriers and non-trade defences to enable Indian exporters' access to ASEAN markets, especially automotive and agricultural products.

As a key player in Southeast Asia and hosting the ASEAN Summit this year, Malaysia provides India with a stronger platform to enhance its trade relations within the dynamic bloc, say observers. 

ASEAN, with its 670-million consumer market and strategic importance, along with India, the world's fifth-largest economy, could create a strong trade synergy.

Indian media reports have been highlighting the intention of policymakers in New Delhi to resolve the non-tariff barriers, import duties, rules of origin issues, and Customs Procedures and Trade Facilitation, which have been hindering India's expansion into ASEAN markets.

Fellow at the Delhi-based Observer Research Foundation, Soumya Bhowmick, said New Delhi is optimistic about Malaysia's ASEAN chairmanship, as it offers an opportunity to recalibrate and strengthen India-ASEAN ties.

“Policymakers view this as a chance to push forward negotiations on AIFTA (ASEAN-India Free Trade Agreement) and address long-standing concerns like the trade deficit and non-tariff barriers. 

“The focus will also likely include greater alignment on strategic priorities such as maritime security, sustainable development and enhanced regional connectivity.

“India's readiness to engage with Malaysia reflects shared interests in balancing regional economic dynamics while protecting domestic industries through revised tariff structures and enhanced trade facilitation mechanisms,” Soumya told Bernama from Delhi in an email interview.

India has been ASEAN’s dialogue partner since 1992 and their ties were elevated to a strategic partnership level in 2012.

India’s engagement with ASEAN has been driven by three pillars - enhancing India-ASEAN connectivity, strengthening the ASEAN organisation, and expanding maritime cooperation.

Bilateral trade reached RM452 billion (US$101.9 billion) in 2023. 

“Non-tariff barriers remain a significant hurdle for Indian exporters to ASEAN, despite tariff reductions under agreements like AIFTA. Regulatory asymmetries, stringent food safety standards and complex customs procedures particularly hinder exports of agricultural and manufactured goods. 

“Recent AITIGA (ASEAN-India Trade in Goods Agreement) negotiations,  including discussions on simplifying customs and revising sensitive lists, aim to address these barriers. 

“India's focus on harmonising rules of origin and tackling NTBs (non-tariff barriers) through mutual agreements highlights the critical need for transparent and predictable trade practices to unlock the full potential of its partnership with ASEAN,” said Soumya.

Building on the ASEAN-India Comprehensive Strategic Partnership, the upcoming years will likely focus on addressing the trade imbalance through revisions of the AIFTA and the Comprehensive Economic Cooperation Agreement. 

“These revisions aim to improve Indian exporters' access to ASEAN markets, particularly in the automotive and agricultural sectors, while ensuring reciprocity in trade benefits. 

“The Production-Linked Incentive (PLI) schemes and efforts to boost domestic manufacturing align with India's "Atmanirbhar Bharat" initiative, allowing the country to integrate regional collaboration with self-reliance,” he said.

In addition, initiatives like the ASEAN-India Year of Tourism in 2025 and advancements in digital connectivity, this partnership is poised to deepen people-to-people connections, enhance regional stability and strengthen economic ties.

-- BERNAMA