FTA PORTAL - AIFTA Case Model

Overview of AIFTA Case Model

AIFTA Overview 1: The ASEAN-India Trade in Goods Agreement was signed and entered into force on 1 January 2010. Under the Agreement, ASEAN Member States and India have agreed to open their respective markets by progressively reducing and eliminating duties on 76.4% coverage of good.

AIFTA Overview 2: Economic co-operation activities under the AIFTA are now being undertaken on agriculture, fisheries and forestry; services; mining and energy; science and technology; transport and infrastructure; manufacturing; human resource development; and other sectors such as handicrafts, small and medium enterprises (SMEs), competition policy, Mekong Basin Development, intellectual property rights and government procurement.

Utilization of AIFTA's Benefit

Production and Logistics Hub Utilization Model using Export counter-party's FTA Partner Countries

Tariff reduction double effect

Of the numerous regional trade agreements, this model aims to achieve dual tariff reduction benefits by utilizing not only the FTAs our country has concluded but also the FTAs concluded by our partner countries.

India's FTA Partner country
As of 2024, the FTAs that India has concluded are as follows:

ASEAN
India has a comprehensive FTA with the Association of Southeast Asian Nations, which includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
Japan
India and Japan have a Comprehensive Economic Partnership Agreement (CEPA).
South Korea
The India-South Korea Comprehensive Economic Partnership Agreement (CEPA) facilitates trade between the two nations.
Sri Lanka
India has a Free Trade Agreement with Sri Lanka.
Australia
The India-Australia Economic Cooperation and Trade Agreement (ECTA) was signed recently.
United Arab Emirates
The India-UAE Comprehensive Economic Partnership Agreement (CEPA) came into effect in 2022.
Mauritius
The India-Mauritius Comprehensive Economic Cooperation and Partnership Agreement (CECPA) was implemented in 2021.
EFTA
This includes Iceland, Liechtenstein, Norway, and Switzerland.
SAFTA
SAFTA is a trade agreement aimed at reducing tariffs and trade barriers among its member countries to promote regional economic integration. SAFTA is part of the South Asian Association for Regional Cooperation (SAARC), which includes Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, Sri Lanka.

Exporting Raw Materials and Semi-finished Products to Partner Countries and Exporting Finished Products Duty-free to Third Countries

Dual Tariff Reduction Effect

By leveraging the FTAs between our country and partner countries, as well as the FTAs between partner countries and third countries, we can achieve a dual reduction in tariffs.

Establishing Production Facilities

Setting up production facilities in countries with which we have FTAs can reduce logistics costs and also take advantage of FTAs between these countries and third countries.

This business strategy involves multiple steps:

01

Export Raw Materials and Semi-finished Products
The company exports raw materials or semi-finished products from the home country to a partner country with which it has an FTA.
02

Manufacture Finished Products in Partner Country
The partner country, benefiting from favorable trade terms due to the FTA, processes these materials into finished products.
03

Export Finished Products Duty-free to Third Countries
Utilize the partner country's FTAs with third countries to export the finished products duty-free. This leverages the existing FTAs to minimize tariffs at multiple stages.
04
Cost and Efficiency Benefits

Minimize tariffs through multiple FTAs.

Reduce logistics and transportation costs by manufacturing closer to the target markets.

Gain easier access to third-country markets through the partner country’s trade agreements.