The ASEAN-India Free Trade Agreement (AIFTA) is a comprehensive trade agreement between India and the Association of Southeast Asian Nations (ASEAN) that was signed back in 2009. One of the countries that is a member of ASEAN and party to AIFTA is Indonesia.
AIFTA aims to reduce or eliminate trade barriers between India and ASEAN member countries, including Indonesia. Since its implementation, both India and ASEAN countries have experienced increased trade and investments, which has led to economic growth and development.
Indonesia is the largest economy in Southeast Asia, and as a member of ASEAN, it benefits from the free trade agreement with India. The agreement has opened up new opportunities for Indonesian businesses to export products to India, which is a significant market with over 1.3 billion people.
Under AIFTA, Indonesia has been able to export products like textiles, footwear, electronics, and agricultural products to India without facing high tariff rates. On the other hand, India has been able to export goods like pharmaceuticals, automobiles, and machinery to Indonesia.
The free trade agreement has also encouraged foreign investment in Indonesia. Indian companies have been actively investing in Indonesia, particularly in sectors like infrastructure, energy, and consumer goods. The two countries have also been working together to promote tourism and cultural exchange, which has further strengthened their economic relationship.
In 2019-20, the total bilateral trade between India and Indonesia stood at USD 21.2 billion. The two countries are looking to increase trade to USD 50 billion by 2025.
However, AIFTA has faced some challenges, with issues like non-tariff barriers and the need for regulatory harmonization. The two countries have been working towards resolving these issues to ensure that the free trade agreement benefits both economies.
In conclusion, the ASEAN-India Free Trade Agreement has been beneficial for both India and Indonesia. It has opened up new opportunities for trade and investment, which has led to economic growth and development. As a member of ASEAN, Indonesia has been able to leverage the free trade agreement to increase exports to India, while Indian companies have been investing in Indonesia. While there are challenges to the agreement, the two countries are working towards resolving them to ensure that they can achieve their trade target of USD 50 billion by 2025.