Trade Deficit Dilemma: Assessing AIFTA's Impact on India’s Bilateral Trade

The study examines the AIFTA agreement's impact on bilateral trade volumes and deficits, implying that one may find that the agreement has a ‎disproportionately positive impact on the ASEAN member states. The study employs a mixed-method approach to analyze structural changes-‎es in India's trade basket during the AIFTA period. It consists of a product-level analysis at the HS six-digit level for selected liberalized ‎goods, along with a comparative study of MFN and FTA tariff rates to determine their impact on bilateral trade. The study highlights unequal FTA-MFN tariffs for palm oil and pepper, and an inverted duty regime for aluminum and copper, thus emphasizing the need to go ‎deeper and carry out product-level analysis beyond trade deficit trends. Limited access to detailed preferential trade data restricts the ability ‎of AIFTA to carry out empirical analysis. Further research will require more advanced datasets and deeper product-level analysis to adequately track its impact. The study contributes to the AIFTA literature by developing tariff analysis methods and performing case studies to ‎create policy insights that would help in better tariff design under the Agreement‎.