[5] The ASEAN–India Free Area emerged from a mutual interest of both parties to expand their economic ties in the Asia-Pacific region.
India's Look East policy was reciprocated by similar interests of many ASEAN countries to expand their interactions westward.
Acknowledging this trend and recognising the economic potential of closer linkages, both sides recognised the opportunities for deepening trade and investment ties, and agreed to negotiate a framework agreement to pave the way for the establishment of an ASEAN–India Free Trade Area (FTA).
ASEAN and India signed the ASEAN-India Trade in Goods (TIG) Agreement in Bangkok on 13 August 2009, after six years of negotiations.
[8] At the 10th ASEAN-India Summit in New Delhi on 20 December 2012, India and ASEAN concluded negotiations for FTAs in services and investments.
The Fourteenth ASEAN Transport Ministers (ATM) Meeting on 6 November 2008 in Makati, Metro Manila, Philippines adopted the ASEAN-India Aviation Cooperation Framework, which will lay the foundation for closer aviation co-operation between ASEAN and India.
The signing of the ASEAN-India Trade in Goods Agreement paves the way for the creation of one of the world's largest FTAs – a market of almost 1.8 billion people with a combined GDP of US$2.8 trillion.
[11] Since the early 2000s, India has had an increasing trade deficit with ASEAN, with imports exceeding exports by more than US$6 billion in 2007–2008.
It fears that cheap imports of rubber, coffee, and fish would lower domestic production, adversely affecting farmers and ultimately its economy.
[13] Kerala has already experienced a flooding of its market with inexpensive imports under the South Asia Free Trade Agreement of 2006.
[13] To alleviate the losses that arise from the initial stages of trade, the Government of India must be able to effectively redistribute some of the wealth to those industries who suffer from the increased competition with ASEAN markets.