Impact of India-ASEAN Free Trade Agreement: An Assessment from the Trade Creation and Trade Diversion Effects

Publication Date01 November 2021
AuthorLoitongbam Bishwanjit Singh
Date01 November 2021
DOI10.1177/00157325211021503
SubjectArticles
Impact of India-ASEAN
Free Trade Agreement:
An Assessment from
the Trade Creation and
Trade Diversion Effects
Loitongbam Bishwanjit Singh1
Abstract
This article investigates the impacts on the India–Association of Southeast Asian
Nations (ASEAN) Free Trade Agreement (IAFTA) on trade creation and trade
diversion. The gravity model is employed, where multilateral resistance terms are
included. A panel data set of 45 countries that included India, ASEAN-10 nations
and India’s top 34 trading partners in 2018 were used for the period from 1996
to 2018. The article explored that IAFTA leads to a trade creation in total bilat-
eral trade in terms of exports and imports. The analysis further explored that the
import creation effect was higher than that of the export creation effect.
Keywords
Trade creation, trade diversion, India, ASEAN, FTA
Introduction
India is one of the top Asian countries, having the highest number of Free Trade
Agreements (FTA) with other nations, either in operation or under negotiation/
proposed. In terms of the number, the country has 42 trade agreements with other
nations, including preferential trade agreements (PTAs) (The Economic Times,
2019). Of the total agreements, 13 are in operation, and the remaining 29 are
Article
1 Department of South East Asian Studies, Manipur University, Canchipur, Imphal, Manipur, India.
Corresponding author:
Loitongbam Bishwanjit Singh, Department of South East Asian Studies, Manipur University,
Canchipur, Imphal, Manipur 795003, India.
E-mail: bishanjit99@gmail.com
Foreign Trade Review
56(4) 400–414, 2021
© 2021 Indian Institute of
Foreign Trade
Reprints and permissions:
in.sagepub.com/journals-permissions-india
DOI: 10.1177/00157325211021503
journals.sagepub.com/home/ftr

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