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An Analysis of Trade Imbalances between India and Major ASEAN Economies 2012–2024

Pooja Suresh

Abstract

India’s economic engagement with the Association of Southeast Asian Nations (ASEAN) has intensified over the past decade, yet this expansion has been accompanied by persistent and widening trade imbalances. This paper analyses India’s bilateral trade imbalances with major ASEAN economies—Indonesia, Malaysia, Thailand, Vietnam, and Singapore—over the period 2012–2024. Using secondary data from the Ministry of Commerce and Industry, UN Comtrade, ASEAN Secretariat, and EXIM Bank of India, the study employs descriptive and comparative analysis along with HS 2-digit commodity composition to identify structural drivers of trade deficits. The findings reveal that while total trade volumes have increased substantially, India’s imports from ASEAN have grown at a faster pace than exports, leading to a consistently negative trade balance, particularly after 2018–19. Key contributors to the deficit include coal, palm oil, electronics, machinery, and intermediate inputs, reflecting India’s dependence on energy resources and manufacturing value chains dominated by ASEAN economies. The study also highlights the role of tariff asymmetry under the ASEAN–India Free Trade Agreement, weak enforcement of rules of origin, non-tariff barriers, and underutilization of FTA benefits by Indian exporters. The paper concludes that India’s trade deficit with ASEAN is largely structural in nature and recommends targeted policy interventions such as rebalancing tariff concessions, strengthening rules of origin, export diversification, and a country-specific trade strategy to achieve a more sustainable and mutually beneficial trade relationship.

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DRA ANNUAL INTERNATIONAL CONFERENCE 2024 ON “SOCIO-ECONOMIC TRANSFORMATION: OPPORTUNITIES AND CHALLENGES” Int. Jr. of Contemp. Res. in Multi. PEER-REVIEWED JOURNAL Volume 4 [Special Issue 1] Year 2025 90 © 2025 Pooja Suresh. This is an open-access article distributed under the terms of the Creative Commons Attribution 4.0 International License (CC BY NC ND).https://creativecommons.org/licenses/by/4.0/ Conference Paper An Analysis of Trade Imbalances between India and Major ASEAN Economies 2012–2024 Pooja Suresh Research Scholar, Gujarat University, Ahmedabad, Gujarat, India Corresponding Author: *Pooja Suresh DOI: https://doi.org/10.5281/zenodo.17965793 Abstract Manuscript Information India’s economic engagement with the Association of Southeast Asian Nations (ASEAN) has intensified over the past decade, yet this expansion has been accompanied by persistent and widening trade imbalances. This paper analyses India’s bilateral trade imbalances with major ASEAN economies—Indonesia, Malaysia, Thailand, Vietnam, and Singapore—over the period 2012–2024. Using secondary data from the Ministry of Commerce and Industry, UN Comtrade, ASEAN Secretariat, and EXIM Bank of India, the study employs descriptive and comparative analysis along with HS 2-digit commodity composition to identify structural drivers of trade deficits. The findings reveal that while total trade volumes have increased substantially, India’s imports from ASEAN have grown at a faster pace than exports, leading to a consistently negative trade balance, particularly after 2018–19. Key contributors to the deficit include coal, palm oil, electronics, machinery, and intermediate inputs, reflecting India’s dependence on energy resources and manufacturing value chains dominated by ASEAN economies. The study also highlights the role of tariff asymmetry under the ASEAN–India Free Trade Agreement, weak enforcement of rules of origin, non-tariff barriers, and underutilization of FTA benefits by Indian exporters. The paper concludes that India’s trade deficit with ASEAN is largely structural in nature and recommends targeted policy interventions such as rebalancing tariff concessions, strengthening rules of origin, export diversification, and a country-specific trade strategy to achieve a more sustainable and mutually beneficial trade relationship. ▪ ISSN No: 2583-7397 ▪ Received: 12-12-2024 ▪ Accepted: 22-02-2025 ▪ Published: 24-03-2025 ▪ IJCRM:4(SP1); 2025:90-95 ▪ ©2025, All Rights Reserved ▪ Plagiarism Checked: Yes ▪ Peer Review Process: Yes How to Cite this Article Suresh P. An Analysis of Trade Imbalances between India and Major ASEAN Economies 2012– 2024. Int J Contemp Res Multidiscip. 2025;4(SP1):90-95. Access this Article Online www.multiarticlesjournal.com KEYWORDS: India–ASEAN trade, trade imbalance, ASEAN–India Free Trade Agreement, commodity composition, tariff asymmetry, bilateral trade deficit. DRA ANNUAL INTERNATIONAL CONFERENCE 2024 ON “SOCIO-ECONOMIC TRANSFORMATION: OPPORTUNITIES AND CHALLENGES” Int. Jr. of Contemp. Res. in Multi. PEER-REVIEWED JOURNAL Volume 4 [Special Issue 1] Year 2025 91 © 2025 Pooja Suresh. This is an open-access article distributed under the terms of the Creative Commons Attribution 4.0 International License (CC BY NC ND).https://creativecommons.org/licenses/by/4.0/ 1. INTRODUCTION India and ASEAN share a long history of trade and cultural exchanges, dating back to ancient maritime routes that connected the Indian subcontinent with Southeast Asia. India’s formal engagement with ASEAN began in 1992 through the launch of the ‘Look East Policy’, which was later revitalized and expanded into the more proactive ‘Act East Policy’ under the leadership of Prime Minister Narendra Modi. This shift symbolized a strategic recalibration of India’s foreign and trade policy, aimed at deeper connectivity with Southeast Asia (Muni, 2011). This partnership deepened over the years, culminating in India becoming a full dialogue partner in 1996. From a trade perspective, India's interest in ASEAN was driven by the group’s dynamic economic growth, significant market size, and regional production networks. Between 2012 and 2024, India’s trade with ASEAN nations such as Indonesia, Malaysia, Thailand, Vietnam, and Singapore has shown varying patterns in terms of export growth, import dependence, and sectoral shifts. While ASEAN provides a crucial market for Indian petroleum, pharmaceuticals, and engineering goods, India’s imports from ASEAN are dominated by electronic goods, palm oil, machinery, natural gas, and rubber, which has widened the trade imbalance, which have become a persistent feature of bilateral economic relations, especially between developed and developing nations, and also within regional trading blocs. However, despite increased trade volumes, India has consistently recorded trade deficits with several major ASEAN economies, raising concerns over sustainability, competitiveness, and the strategic orientation of the partnership. From a policy perspective, understanding the magnitude, structure, and causes of these imbalances is vital. Persistent deficits can affect foreign exchange reserves, domestic industry competitiveness, and bargaining power in trade negotiations. Conversely, certain deficits may reflect the natural dynamics of comparative advantage, indicating beneficial integration into global value chains. Thus, this paper aims to analyse the patterns, causes, and implications of India’s trade imbalances with major ASEAN economies over the period 2012–2024, offering an evidencebased perspective for policymakers, businesses, and researchers. 2. LITERATURE REVIEW Bhattacharyya and Mandal (2018) examined the impact of the ASEAN–India Free Trade Agreement in Goods (AIFTA) on bilateral trade flows. Their analysis revealed that while trade volumes expanded significantly after tariff reductions, the growth in imports from ASEAN outpaced exports from India, thereby widening the trade deficit. The study highlights the structural nature of India’s import dependence on ASEAN for resource-based goods such as palm oil, rubber, and mineral fuels. Batra and Khan (2020) analyzed India’s bilateral trade data with ASEAN at the HS-2 digit level and found that trade imbalances are heavily commodity-concentrated. Imports of palm oil from Indonesia and Malaysia, coal from Indonesia, and electronics from Vietnam and Thailand accounted for over 60% of the deficit. The authors argued that without diversification in India’s export basket, deficits will persist despite increased trade facilitation. Ghosh and Narayanan (2019) explored the theoretical framework of comparative advantage in the context of India– ASEAN trade. They argued that persistent deficits in certain commodities are not necessarily negative if these imports complement domestic production and industrial growth. However, they caution against over-reliance on a few suppliers, which increases vulnerability to supply and price shocks. Kaur and Sidhu (2021) investigated the role of tariff liberalisation under AIFTA and concluded that while tariffs on most goods have been reduced to near-zero, non-tariff barriers (NTBs) in ASEAN markets hinder Indian exports. Conversely, Indian markets are more open to ASEAN products, explaining the asymmetry in trade balance outcomes. Thangavelu and Narjoko (2020) noted that ASEAN’s integration into global value chains (GVCs) has strengthened its manufacturing export base, while India remains less integrated in electronics and machinery value chains. This explains India’s high import dependence in these sectors. They suggest that India’s participation in GVCs is essential to correcting structural imbalances. Kalam and Singh (2017) focused on the role of energy imports from ASEAN, especially natural gas from Malaysia and coal from Indonesia, in shaping India’s trade deficit. They argued that while these imports are critical for India’s energy security, they contribute significantly to the imbalance. A long-term strategy for renewable energy development could reduce the deficit’s structural component. Nguyen and Sharma (2022) studied the COVID-19 pandemic’s effects on ASEAN–India trade. They found that while India’s imports from ASEAN dipped sharply in 2020 due to supply chain disruptions, the recovery in 2021–22 saw imports rebound faster than exports, widening the trade gap again. This resilience of ASEAN exports highlights their manufacturing competitiveness relative to India. 3. OBJECTIVES 1. To examine the trends in India’s bilateral trade with major ASEAN economies (Indonesia, Malaysia, Thailand, Vietnam, Singapore) between 2012 and 2024. 2. To measure the magnitude and direction of bilateral trade imbalances. 3. To identify the key commodities contributing to the trade deficits and surpluses. 4. To provide policy recommendations for achieving towards a more balanced trade relationship. DRA ANNUAL INTERNATIONAL CONFERENCE 2024 ON “SOCIO-ECONOMIC TRANSFORMATION: OPPORTUNITIES AND CHALLENGES” Int. Jr. of Contemp. Res. in Multi. PEER-REVIEWED JOURNAL Volume 4 [Special Issue 1] Year 2025 92 © 2025 Pooja Suresh. This is an open-access article distributed under the terms of the Creative Commons Attribution 4.0 International License (CC BY NC ND).https://creativecommons.org/licenses/by/4.0/ 4. METHODOLOGY & DATA SOURCES The following data for exports and imports for India-ASEAN trade have been collected from Ministry of Commerce for the period of study 2012 to 2024: a) Export–Import Bank of India reports b) Ministry of Commerce & Industry (DGCI&S) statistics c) UN Comtrade Database d) ASEAN Secretariat trade statistics The approach of analysis includes: descriptive statistical analysis to show year-wise trends, comparative analysis among ASEAN nations, graphs & tables to visualise patterns and discussion linking trends to policy changes, currency movements, and global demand shocks (e.g., COVID-19 pandemic, commodity price fluctuations). Indicators Used: a) Trade Balance = Exports – Imports b) Commodity Composition Analysis – HS 2-digit level data to identify top deficit-causing products 5. ANALYSIS Export-Import analysis Table 1 presents India’s trade with ASEAN since 2012 onwards. The total trade between India and ASEAN over the years has demonstrated significant fluctuations, as evidenced by the data from 2012-13 to 2023-24. Beginning with $75,875 million in 2012-13, the trade volume exhibited a marginal decline to $74,412 million in 2013-14, followed by a moderate increase to $76,527 million in 2014-15. After a considerable gap, the trade surged significantly to $110,409 million in 202122, reflecting the recovery and expansion of economic activities post-pandemic. This upward trend continued with $131,578 million in 2022-23, before slightly declining to $120,874 million in 2023-24.It is revealed that India’s imports from ASEAN has continuously increased ranging from $42866 million in 2012-13 to $79667 million in 2023-24, having an increase of 3.1 % Table 1: India’s Trade with ASEAN (US $million) Year Exports Import Trade balance 2012-13 33008 (11) 42866 (8.7) -9858 2013-14 33134 (11) 41278 (9.2) -8145 2014-15 31813 (10) 44715 (10) -12902 2015-16 25133 (10) 39910 (10.5) -14776 2016-17 30962 (11) 40617 (10.6) -9656 2017-18 34204 (11) 47134 (10.1) -12930 2018-19 37474 (11) 59321 (11.5) -21848 2019-20 31547 (10) 55370 (11.7) -23823 2020-21 31486 (11) 47421 (12) -15935 2021-22 42328 (10) 68081 (11.1) -25754 2022-23 44000 (10) 87577 (12.2) -43577 2023-24 41208 (9) 79667 (11.8) -38459 Note: Figures in parentheses () show share of ASEAN in India’s total Trade, exports and imports respectively. Source: Department of Commerce, Ministry of Commerce and Industry (GOI) The trade balance has been consistently negative, indicating trade deficit i.e. imports from ASEAN is more than our exports to them. In 2012-13, trade balance was $9858 million which rose to $14776 in 2015-16. It reduced in 2016-17 to $9656 million but started increasing again in 2017-18. Since the imports have always been higher than the exports, the trade balance has always been negative. It was highly negative during the study period with $43577 million as imports in this fiscal year was double the exports. The widening gap in bilateral trade is stark. The deficit nearly with periods of temporary improvement, such as during the 2020 pandemic-related slowdown. Table 2: India–ASEAN Country-Wise Trade (Top 5 nations) ($billion) Fiscal Year Country Export Import Trade Balance 2012-13 Indonesia 5331 14879 -9548 Singapore 13619 7486 6133 Malaysia 4444 9951 -5507 Thailand 3733 5353 -1620 Vietnam 3967 2315 1652 2013-14 Indonesia 4850 14748 -9898 Singapore 12511 6762 5749 Malaysia 4198 9230 -5032 Thailand 3703 5340 -1637 Vietnam 5442 2594 2848 2014-15 Indonesia 4043 15005 -10962 Singapore 9809 7124 2685 DRA ANNUAL INTERNATIONAL CONFERENCE 2024 ON “SOCIO-ECONOMIC TRANSFORMATION: OPPORTUNITIES AND CHALLENGES” Int. Jr. of Contemp. Res. in Multi. PEER-REVIEWED JOURNAL Volume 4 [Special Issue 1] Year 2025 93 © 2025 Pooja Suresh. This is an open-access article distributed under the terms of the Creative Commons Attribution 4.0 International License (CC BY NC ND).https://creativecommons.org/licenses/by/4.0/ Malaysia 5817 11118 -5301 Thailand 3465 5866 -2401 Vietnam 6258 3003 3255 2015-16 Indonesia 2819 13132 -10313 Singapore 7720 7308 412 Malaysia 3707 9084 -5377 Thailand 2988 5510 -2522 Vietnam 5266 2560 2706 2016-17 Indonesia 3488 13428 -9940 Singapore 9565 7087 2478 Malaysia 5225 8934 -3709 Thailand 3133 5415 -2282 Vietnam 6787 3321 3466 2017-18 Indonesia 3964 16439 -12475 Singapore 10203 7467 2736 Malaysia 5702 9012 -3310 Thailand 3654 7134 -3480 Vietnam 7813 5019 274 2018-19 Indonesia 5276 15850 -10574 Singapore 11572 16282 -4710 Malaysia 6436 10819 -4383 Thailand 4441 7442 -3001 Vietnam 6507 7192 -685 2019-20 Indonesia 4129 15062 -10933 Singapore 8923 14747 -5824 Malaysia 6365 9782 -3417 Thailand 4299 6788 -2489 Vietnam 5060 7283 -2223 2020-21 Indonesia 5026 12470 -7444 Singapore 8676 13305 -4629 Malaysia 6058 8373 -2315 Thailand 4238 5682 -1444 Vietnam 5000 6121 -1121 2021-22 Indonesia 8472 17703 -9231 Singapore 11151 18962 -7811 Malaysia 6995 12424 -5429 Thailand 5751 9333 -3582 Vietnam 6703 7439 -736 2022-23 Indonesia 10024 28820 -18796 Singapore 11993 23595 -11602 Malaysia 7156 12735 -5579 Thailand 5710 11193 -5483 Vietnam 5909 8795 -2886 2023-24 Indonesia 5989 23411 -17422 Singapore 14414 21201 -6787 Malaysia 7262 12754 -5492 Thailand 5039 9909 -4870 Vietnam 5470 9345 -3875 Source: Department Of Commerce, Ministry of Commerce and Industry (GOI) From the above Table 2, it can be observed that from year 2012-13 to 2017-18, only Singapore and Vietnam experienced trade surplus whereas Indonesia, Malaysia and Thailand have been experiencing trade deficit. From 2018-19 onwards, Singapore and Vietnam too observed trade deficit. This shift can be explained by a mix of structural and policy related factors tie into both commodity flows and the operation of the ASEAN–India Free Trade Agreement (AIFTA). 1. Shift in Commodity Import Patterns a) Electronics & Machinery Surge: After 2017–18, India’s imports of HS 84 (machinery) and HS 85 (electronics) from ASEAN surged. b) In Singapore’s case, a large portion of these were highvalue, low-bulk electronics and precision equipment, often re-exported from other manufacturing hubs (like China, Taiwan, or Japan) via Singapore’s role as a transshipment hub. c) Vietnam also became a major electronics exporter after Samsung and other multinational manufacturers scaled up DRA ANNUAL INTERNATIONAL CONFERENCE 2024 ON “SOCIO-ECONOMIC TRANSFORMATION: OPPORTUNITIES AND CHALLENGES” Int. Jr. of Contemp. Res. in Multi. PEER-REVIEWED JOURNAL Volume 4 [Special Issue 1] Year 2025 94 © 2025 Pooja Suresh. This is an open-access article distributed under the terms of the Creative Commons Attribution 4.0 International License (CC BY NC ND).https://creativecommons.org/licenses/by/4.0/ production there (post-2016). This led to a jump in India’s imports of mobile phones, components, and integrated circuits from Vietnam. 2. Palm Oil & Coal Import Boom a) Indonesia and Malaysia have always been big palm oil suppliers, but from 2018–19 onwards, India also began sourcing refined palm oil (RPO) via Singapore and Vietnam due to import duty arbitrage and re-routing. b) In Vietnam’s case, coal and other minerals began showing up in bilateral trade data due to Vietnamese intermediaries sourcing from third countries. 3. Import Diversion through ASEAN Hubs From 2018 onward, there were multiple reports from the Ministry of Commerce that goods of Chinese origin especially electronics and telecom products were being routed through Singapore and Vietnam under AIFTA preferential rates. This “origin shopping” meant imports jumped sharply even though ASEAN wasn’t the actual producer in many cases. Commodity Composition Analysis (HS 2-Digit) The following commodities stood out in terms of volume and contribution to the trade deficit: a) Coal (HS 27): ~US$14.2 billion (prime contributor) b) Crude and Refined Palm Oil (HS 15): ~US$11 billion total c) Electronics Components (HS 85, sub-categories): ~US$10.4 billion. Includes computers & laptops (~US$2.4B), telecom/mobile parts (~US$2.2B), integrated circuits (~US$1.9B) d) Machinery (HS 84): ~US$7.1 billion e) Plastics (HS 39): ~US$3.8 billion f) Iron & Steel (HS 72): ~US$3.3 billion g) Crude Oil & Products: ~US$2.7 billion An examination of HS 2-digit level data for FY 2022–23 underscores that the major contributors to India's trade deficit with ASEAN are energy, agricultural raw materials, intermediate inputs, and machinery. Notably, coal (HS 27) accounts for approximately US$14.2 billion of imports, while palm oil (HS 15) contributes another US$11 billion (together comprising over US$25 billion or more than half of the trade deficit). Despite India’s efforts to boost domestic industrial capacity, the country remains heavily reliant on electronic goods and components (HS 85) imported to the tune of US$10.4 billion. These include essential inputs such as computers, telecom parts, and integrated circuits, which serve domestic assembly under incentive schemes highlighting structural gaps in India's upstream manufacturing capabilities. Imports under machinery (HS 84) also remain significant (~US$7.1 billion), underscoring continued dependence on capital goods from ASEAN. Plastics (HS 39, ~US$3.8B), iron & steel (HS 72, ~US$3.3B), and fossil fuel derivatives, including crude petroleum (~US$2.7B) and copper concentrates (~US$1.1B), further compound the deficit burden. Trade deficit reasons 1. Tariff Asymmetry: India liberalised approximately 71– 74% of tariff lines under AIFTA, whereas ASEAN nations reciprocated with lower concessions—Indonesia (~41%), Vietnam (~66.5%), Thailand (~67%)—creating a systemic imbalance. 2. Rules of Origin Loopholes: Lax enforcement has allowed third-country goods particularly from China—to be diverted via ASEAN into India, undercutting Indian manufacturers. 3. The concentration in specific HS categories especially energy (coal, palm oil) and intermediate goods (electronics, machinery) reveals structural deficit drivers that require industrial policy levers. 4. Non-Tariff Barriers (NTBs): Complex certifications, SPS regulations, and licensing hurdles in sectors like agriculture and pharmaceuticals limit India's market access in ASEAN, even where tariffs are lowered. 5. Underutilization of FTA: Surveys reveal low awareness and use of AIFTA benefits among Indian exporters, prompting the commerce department to send questionnaires to exporters to diagnose underutilization issues. 6. FINDINGS 1. India’s trade deficit with ASEAN has grown sharply from 2018-19. Singapore and Vietnam transitioned into deficit positions for India, aligning with an import surge in electronics (HS 85), machinery (HS 84), and refined palm oil (HS 15). Deficits with Indonesia, Malaysia, and Thailand widened further due to increases in both energy and intermediate goods imports. 2. The structural asymmetries within AITIGA, including tariff liberalisation imbalance and poor safeguards against trade diversion, have exacerbated imbalances. 3. Over the period 2012–2024, Indonesia emerged as the largest single contributor to India’s ASEAN trade deficit, followed by Singapore and Malaysia. Thailand and Vietnam’s deficits, while smaller in absolute terms, have shown faster rates of deterioration post-2018. 4. ASEAN’s strong manufacturing ecosystems and India’s under-diversified export basket underlie deeper competitiveness issues. DRA ANNUAL INTERNATIONAL CONFERENCE 2024 ON “SOCIO-ECONOMIC TRANSFORMATION: OPPORTUNITIES AND CHALLENGES” Int. Jr. of Contemp. Res. in Multi. PEER-REVIEWED JOURNAL Volume 4 [Special Issue 1] Year 2025 95 © 2025 Pooja Suresh. This is an open-access article distributed under the terms of the Creative Commons Attribution 4.0 International License (CC BY NC ND).https://creativecommons.org/licenses/by/4.0/ 7. CONCLUSION India’s trade with major ASEAN economies has expanded, but persistent and growing deficits reflect structural mismatches within the FTA framework—ranging from tariff asymmetries to enforcement gaps in rules of origin and underutilization of the agreement’s benefits by Indian exporters. Following are the policy recommendations: 1. 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