Suresh K Goel

India-ASEAN Trade Trends:

Total India -ASEAN trade in 2008-09 was US$45.34 billion with deficit against India at US$7.06 billion. It went up to US$110.39 in 2021-22, US$ 131 billion in 22-23(post RCEP and post Covid period) and declined to US$ 121 billion in 23-24, probably as a reaction to growing adversity in India trade. Deficit against India during these years were US$ 25.75 billion, 43.51 billion and 39 billion.

The point here is that the India ASEAN trade post RCEP grew by 20% while the deficit increased by almost 50%. During the year 22-23, Indian exports to ASEAN grew barely 5% while imports grew practically 30%. It is interesting to note that imports from countries like Laos and Cambodia into India witnessed a significantly large growth. China which already had a huge footprint in these countries had begun to use them as a base for value addition exports to countries outside ASEAN as a consequence of the RCEP. India on the other hand had not been able to restrict Chinese access into Indian markets, which was a major reservation for India to not join RCEP.

These conclusions also find support in trends of China ASEAN trade and India China trade.  

India-China Trade Trends:

India and China were trading with each other at a total of US$72.37 with deficit against India at US$48.45 in 2014-15. It grew quite rapidly post RCEP and post Covid to total at 116.13 in 21-22, 113.82 in 22-23(Post Galwan Anti-China sentiment), 118.4in 23-24 and 127.71 in 24-25. Trade deficit against India during these years in billion US dollars was 73.01, 83.20, 85.08 and 99.21. Even when anti-China sentiment had resulted in decline of total trade, the deficit against India grew. It clearly illustrated that anti-China sentiment resulted in lower Indian exports to China but the Chinese exports to India grew, nonetheless. 

China-ASEAN Trade Trends:

China ASEAN trade grew more or less along a similar pattern with a significant difference that trade was more or less balanced before RCEP came into effect. Chinese exports to ASEAN and imports from there were US$138 and 155 billion in 2010, US$ 384 and 300 billion in 2020 and jumped to US$ 575 and 388.88 billion in 2024.

Key Conclusions:

Certain inescapable conclusions from this data is that:

1. ASEAN has been integrated largely into the Chinese supply chains. This is particularly true of post RCEP period. Singapore which is largely a service economy will be an exception because of links with the European and the USA market for technology and financial sectors. 

2. ASEAN countries themselves have benefitted from this integration of supply chains because of the market linkages which China provides for further exports into western markets. However, there is no indication of any resentment or negative feelings in these countries because of this growing linkage or dependence.

India will need to chart her course rather carefully against this background. 

Policy Implications for India

First, we need to carefully examine, suitability and in fact advisability of AITIGA against the strong market integration which already exists in goods trade between China and ASEAN. This integration has been further buttressed by RCEP, and our efforts to insulate our trade form this Chines predominance by not joining RCEP has not only been unproductive but has probably backfired. 

Second, is it time for India to review its stand on RCEP. There have been several suggestions by prominent economists and trade experts that Trump tariffs in fact are a cause for India to explore other trade alternatives and South Asian countries can become a viable option for Indian trade. RCEP could provide that option provided we are adventurous enough to get out of our cocoons and take greater risks in international trade.

Lastly, will it be advisable to explore separate services agreements with select countries in South Asia? Singapore for example will be a powerful springboard for India services trade not only into East Asia but also Pacific and Latin America