The ASEAN-India Free Trade Area (AIFTA) is a comprehensive economic cooperation concept that establishes a free trade area between the ten member states of the Association of Southeast Asian Nations (ASEAN) and the Republic of India. It is not a single act but a framework built upon three distinct agreements: the Trade in Goods Agreement, the Trade in Services Agreement, and the Investment Agreement.
The origin of the AIFTA lies in the Framework Agreement on Comprehensive Economic Cooperation between ASEAN and India, which was signed in October 2003 in Bali, Indonesia, and served as the legal basis for subsequent agreements. The primary problem it was created to solve was the need to expand economic ties and foster a seamless flow of goods, services, and investment between the two regions, aligning with India's Look East (later Act East) policy.
The AIFTA works through its three constituent agreements. The ASEAN-India Trade in Goods Agreement (AITIGA), signed on August 13, 2009, and effective from January 1, 2010, is the core mechanism for goods, committing both sides to progressively reduce and eliminate duties on 76.4% coverage of goods. This agreement aims to liberalize tariffs on over 90% of traded products, including "special products" like palm oil and black tea. The mechanism includes provisions for Rules of Origin and the use of Form AI as the official Certificate of Origin to claim preferential tariff treatment. The ASEAN-India Trade in Services Agreement and the ASEAN-India Investment Agreement were both signed in November 2014. The Services Agreement includes provisions on market access and national treatment, while the Investment Agreement stipulates protection of investment and non-discriminatory treatment.
The AIFTA connects to the broader concept of a Regional Trade and Investment Area (RTIA), which was the long-term objective envisaged by the 2003 Framework Agreement. An informed reader should know that the AIFTA is one of several Free Trade Agreements (FTAs) that ASEAN has with its dialogue partners, such as the ASEAN-China Free Trade Area (ACFTA).
The AIFTA has changed recently in that the AITIGA is currently undergoing a comprehensive review, with calls for an overhaul due to concerns from India regarding an uneven playing field and a ballooning trade deficit with ASEAN. The review aims to make the agreement more "user-friendly, simple, and trade-facilitative". The fundamental structure of the three agreements forming the AIFTA, however, remains the same.