New Delhi: Despite maintaining some of the highest import tariffs on textile and allied products from ASEAN nations, India has witnessed a steady surge in imports from the bloc, particularly from Vietnam, Indonesia, and Thailand.
This trend has culminated in a reversal of India’s trade balance in the textile sector with ASEAN, shifting from a surplus of $0.45 billion in 2021 to a marginal deficit of $0.02 billion in 2023.
According to the report Textile and Allied Products Trade Under ASEAN-India Trade in Goods Agreement: Value Chain Analysis by India Exim Bank which states “India has maintained a protectionist stance in textile imports… with the majority of the tariff lines being placed under the tariff range of 20 per cent and above for all of these countries.” However, this has not deterred the inflow of textiles from ASEAN.
The report delves into the ASEAN-India Trade in Goods Agreement (AITIGA) and notes that Vietnam alone accounted for 42.8 per cent of India’s textile imports from ASEAN in 2023, followed by Indonesia (23.3 per cent) and Thailand (21.3 per cent).
Interestingly, the report notes that these countries have gained greater access to the Indian market despite India’s nominally high tariffs. “In markets such as Indonesia and Malaysia… the limited market share could be because the majority of the tariff lines for imports from India were in the sensitive or exclusion list categories,” the report adds, suggesting a more restrictive posture by ASEAN on Indian exports.
This asymmetric liberalisation, combined with India’s underutilisation of tariff concessions in ASEAN markets, has led to a widening trade imbalance. The report underscores that “India’s imports from ASEAN have more than tripled since 2010,” recording a Compound Annual Growth Rate (CAGR) of 10.5 per cent over the period 2010–2023.
Fabrics and yarns remain the two largest import segments from ASEAN, even in cases where India has demonstrated a comparative advantage. Notably, Vietnam, a country without a revealed comparative advantage in textile fibres, has emerged as a major supplier to India. The report highlights the urgent need to renegotiate the terms of AITIGA to address these disparities.
It notes that “a significant proportion of textile products have been placed under exclusion lists and sensitive tracks by major ASEAN trading partners,” thereby restricting duty-free access for Indian exports even as imports into India continue to grow.