ASEAN-India Free Trade Area (AIFTA)

The ASEAN-India Free Trade Area (AIFTA) is a trade agreement between ASEAN Member States and India that builds stronger economic links and improves trade in goods between both regions. It lowers tariffs and reduces trade barriers so products can move more freely between Southeast Asia and India. Since its implementation in 2010, AIFTA has supported trade across key sectors such as agriculture, manufacturing, electronics, textiles, chemicals, and food products.

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AIFTA sets clear trade rules through its Rules of Origin, which decide whether goods qualify for lower tariff rates. Traders must meet origin requirements and present a Certificate of Origin to access these benefits. For a broader explanation of how origin rules work, see our guide on Rules of Origin. The agreement also improves customs processes and supports clearer trade practices, helping Philippine exporters become more competitive in the Indian market.

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Establishment and Timeline

• The framework agreement was signed on October 8, 2003
• Free Trade Area target implementation: 2013 for Brunei Darussalam, Indonesia, Malaysia, Singapore, Thailand, and India; 2018 for the Philippines and CLMV countries
• The Trade in Goods Agreement (TIG) entered into force January 1, 2010, ratified April 10, 2010, and implemented May 17, 2011

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Scope and Coverage

• Covers most goods under HS Chapters 1 to 97
• Around 86% of tariff lines fall under tariff reduction programs
• About 14% of products fall under special treatment or exclusion

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Tariff Reduction Program

AIFTA classifies products into categories based on how tariffs are reduced:

a. Normal Track (NT) - Tariffs gradually decrease until removal. NT1 follows a faster schedule completed by 2013 or 2018, while NT2 follows a longer timeline extending up to 2016 to 2021.

b. Sensitive Track - Tariffs are reduced but not fully eliminated. Higher tariffs reduced to 5%, with some products allowed limited flexibility. Final reductions may reach around 4%.

c. Special Products - Covers selected goods such as crude and refined palm oil, coffee, and black tea. Each product allows specific tariff rates and timelines agreed by members.

d. Highly Sensitive List (HSL) - Products with limited tariff reductions: Category 1 reduced to 50%, Category 2 reduced by 50%, Category 3 reduced by 25%. Deadlines vary from 2019 to 2024 depending on the country.

e. Exclusion List - Some products do not receive tariff reductions for reasons including national security, public morals, protection of human, animal, and plant life, and environmental conservation. Members review these lists every year.

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Rules of Origin (ROO)

Goods must meet origin requirements to qualify for lower tariffs under AIFTA:

• Wholly obtained goods qualify automatically
• Other goods must meet both Regional Value Content (RVC) of at least 35% and Change in Tariff Subheading (CTSH)
• Required document: Certificate of Origin (Form AI)

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Eligibility for Tariff Concessions

To receive tariff benefits under AIFTA, products must appear in the Inclusion List, meet the Rules of Origin (RVC 35 plus CTSH), and submit a valid Certificate of Origin (Form AI).

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Philippine Implementation

The Philippines applies AIFTA through Executive Order No. 25, issued on February 10, 2011, which took effect on May 17, 2011.

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Why AIFTA Matters to the Philippines

• Expands market access for Philippine exports to India through lower tariffs
• Helps Philippine products become more competitive in the Indian market
• Supports key export sectors such as electronics, agriculture, processed food, chemicals, and manufactured goods
• Encourages foreign investment and stronger economic ties between ASEAN and India
• Strengthens the participation of Philippine businesses in regional supply chains
• Provides access to cheaper raw materials and intermediate goods from India
• Promotes trade diversification beyond traditional export markets

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To understand how import costs are affected by AIFTA tariff rates, see our Importation Costs Breakdown guide.