India and Thailand are pushing for a hard reset of their commercial ties, dragging the sprawling ASEAN-India trade architecture back to the drafting table as New Delhi attempts to correct long-standing trade imbalances. Bilateral merchandise transactions within the broader ASEAN bloc hit $128 billion for the 2025-26 financial year, accounting for roughly eleven percent of India's total global trade. Yet behind these headline figures lies intense bureaucratic friction. New Delhi and Bangkok are actively overhauling the ASEAN-India Trade in Goods Agreement (AITIGA), a pact originally inked in 2009 that critics argue has disproportionately benefited Southeast Asian manufacturers at the expense of Indian domestic industry.
The core grievance is straightforward. For years, Indian policymakers have watched trade deficits widen under the original framework, pointing to asymmetrical tariff elimination schedules. When AITIGA took effect, India slashed import duties across a vast majority of its tariff lines much faster and deeper than several key ASEAN partners. Thai and Indonesian industrial goods entered the Indian market with minimal friction, while Indian exporters faced persistent non-tariff barriers, cumbersome rules of origin compliance, and sanitary restriction hurdles abroad.
To understand why this renegotiation matters, look at how modern supply chains operate on the ground. A hypothetical electronics manufacturer in Chennai trying to export components to Bangkok faces a maze of origin certification paperwork that can eat away profit margins entirely. The ongoing AITIGA review committees, centered heavily around technical sub-groups meeting in New Delhi, are attempting to fix these exact operational bottlenecks. They want to build digital single-window clearance systems and simplify rules of origin so that small and medium enterprises can actually use the preferential tariffs without hiring an army of trade lawyers.
The Geopolitical Pressure Points
Bangkok views closer economic alignment with New Delhi as a vital hedge against slowing growth in traditional Western markets and mounting supply chain volatility originating from East Asia. Prime Minister Paetongtarn Shinawatra’s administration and New Delhi have steadily elevated bilateral mechanisms, aiming to transform historical cultural ties into hard-nosed manufacturing and logistics partnerships.
However, structural economic protectionism remains a formidable hurdle. India's domestic manufacturing push, characterized by production-linked incentive schemes and strict quality control orders, sits in direct tension with regional trade liberalization. Indian industrial lobbies are deeply skeptical of opening domestic markets wider to regional competitors without ironclad guarantees on reciprocity. They remember the post-2010 import surges too well. When tariffs drop without matching concessions from partner nations, local factories bear the brunt of the adjustment cost.
The negotiations are not merely about lowering duties on finished goods. They represent a fundamental struggle over value-addition custody. Both sides want to position themselves as indispensable nodes in emerging Indo-Pacific supply networks, keeping high-value manufacturing localized rather than functioning as mere assembly hubs for foreign components.
Beyond the Bureaucratic Facade
Official communiques from trade ministries talk endlessly about mutual prosperity and streamlining customs procedures. They gloss over the fierce protectionist battles happening behind closed doors. Indian negotiators are playing hardball on product-specific rules of origin to prevent third-party nations—particularly those with aggressive state-subsidized industrial models—from routing goods through Southeast Asian intermediaries to dump cheap inventory into the Indian market tax-free.
Thailand, meanwhile, wants unhindered access to India’s swelling digital economy, agricultural sector, and automobile components market. Bangkok’s manufacturing sector relies heavily on steady raw material inputs and regional export destinations to keep its industrial parks humming.
The success of this trade pact rethink will not be measured by the volume of diplomatic handshakes or the tonnage of joint statements issued in ministerial chambers. It will be measured by whether a mid-sized manufacturer in either country can move goods across borders without losing three weeks to customs verification. Until those operational realities change, the bilateral trade figures will remain impressive on paper while failing to satisfy the economic architects driving the policy.
