India reviewing ASEAN trade pact to curb imports, address Chinese re-routing concerns

India has initiated a review of the ASEAN-India Free Trade Agreement (AIFTA), specifically the ASEAN-India Trade in Goods Agreement (AITIGA), with a focus on addressing concerns about steel imports from ASEAN nations, particularly those potentially linked to Chinese investments.

This review is driven by India’s concerns over trade imbalances, the re-routing of Chinese goods through ASEAN countries to exploit duty concessions, and the impact on domestic industries, including steel.

“FTA review is an ongoing process,” Steel Secretary Sandeep Poundrik confirmed on the sidelines of an interaction in the Ministry. He said suggestions have already been provided on it.

The review primarily seeks to determine if China is routing its excess stocks through these ASEAN nations. Or if the export offerings from these nations follow the “melted and poured” norms, that is, “melted and poured” as “the original location”. This actually means, where the raw steel is first produced in a steel-making furnace in a liquid state; and then poured into its first solid shape. The first solid state can take the form of either a semi-finished product (slab, billets or ingots) or a finished steel mill product.

“There are ways to check whether some of the issues relating to rules of origin are being followed; and whether Chinese offerings are being routed. Some of these issues are being taken up,” an official requesting anonymity said.

One common complaint that had previously been made by the industry was China routing excess stocks through Vietnam, with which India had trade arrangements. This has prompted anti-dumping investigations into metal offerings coming into India from the ASEAN nation.

Recommendations on two anti-dumping probes against China and Vietnam are expected soon, sources said.

Net Importer

In FY25, India was a net importer of steel with imports at a 10-year-high of 9.5 million tonnes (mt); while exports dipped to multi-year low of 5.0 mt. Trade deficit in volume terms was at 4.5 mt, the highest in recent terms.

In terms of country-specific imports, shipments from Korea was the highest at 2.8 mt, followed by China – 2.5 mt, and Japan – 2.0 mt, latest numbers available with the Steel Ministry show.

ASEAN trade

Sources said India is looking for a country-wise review of the AITIGA to contain its rising trade deficit with the 10-nation bloc. 

ASEAN is one of the major trade partners of India with a share of 11 per cent in India’s global trade. In 2023-24, the bilateral trade between India and ASEAN reached $ 122.67 billion with exports at $ 41.2 billion, while imports were at $80 billion during the same period.

Safeguard Duty

Incidentally, India, on April 21, slapped a 12 per cent safeguard duty – temporary tariff – for 200 days on select flat steel imports coming in from China and Vietnam. Imports from other developing countries have currently been left out of the government notification.

“The final recommendations of the DGTR (Directorate General of Trade Remedies) are expected in August or September,” a senior Steel Ministry official said.

Crisil Ratings in a recent report said with duty intervention and relatively favourable input costs, EBITDA per tonne of the domestic primary-steel makers is expected to recover by ₹1,000-1,300 per tonne this fiscal. “This will ease pressure on debt metrics as sectoral leverage had risen last fiscal to fund the sizeable ongoing capital expenditure (capex).

Published on April 22, 2025