Can India bridge the trade gap with Southeast Asia as PM Modi heads to Manila for ASEAN amid China's growing influence?

Prime Minister Narendra Modi’s upcoming visit to Manila for the 23rd ASEAN-India Summit comes as India seeks to deepen economic engagement with Southeast Asia, but faces persistent challenges: a growing trade deficit with the region and China’s growing dominance of regional supply chains.

PM Modi will visit the Philippines from November 16 to 18 to attend the 23rd ASEAN-India Summit and the 21st East Asia Summit.

The meetings scheduled for November 17 are expected to focus on strengthening trade and investment ties, maritime security and regional cooperation.

India’s bilateral trade with the Association of Southeast Asian Nations (ASEAN) has grown substantially to cross $128 billion by 2025-26.

However, the trade deficit has also widened, with imports from the 11-member group exceeding India’s exports by more than $45 billion.

The imbalance highlights the challenge New Delhi faces as it seeks to expand its economic footprint in Southeast Asia, a region where China remains deeply entrenched in manufacturing, infrastructure and supply chains.

Read also | India’s exports to West Asia are recovering from the US-Iran war shock in April-August

Business analysts and officials have warned that reducing the deficit will not be easy in the short term.

India’s trade with ASEAN is closely linked to regional manufacturing networks, many of which depend on Chinese components and intermediate products.

Diversifying these supply chains and increasing India’s export competitiveness will therefore require sustained efforts rather than quick policy changes.

India pushes for revision of ASEAN trade deal

The revision of the ASEAN-India Trade in Goods Agreement (AITIGA) is expected to be an important part of New Delhi’s efforts to address trade imbalances and improve market access for Indian businesses.

Secretary (East) in the Ministry of External Affairs Rudrendra Tandon said discussions on the review were ongoing and that India wanted the process to be completed as soon as possible.

“The conversation is ongoing,” Tandon said when asked about the proposed review at a press conference.

The third edition of the ASEAN-India Development and Cooperation Report (AIDCR) 2026 titled Navigating Global Uncertainties and Strengthening Partnerships was also released in New Delhi by Tandon.

The report offers policy recommendations to enhance cooperation between India and ASEAN, particularly in trade and maritime affairs.

Tandon said Modi’s visit would provide an opportunity to discuss ways to further strengthen India-ASEAN relations.

He described engagement with the regional grouping as a key building block of India’s Act East Policy, along with New Delhi’s bilateral partnerships with individual member states.

China remains central to Southeast Asia’s supply chains

India’s efforts to reduce its trade deficit with ASEAN face a structural challenge.

China has built a strong position in the region’s manufacturing and export networks, supplying components and intermediate products used by Southeast Asian industries.

This makes it difficult for India to quickly replace existing trade relationships or substantially increase exports without improving its own production capacity, competitiveness and integration into regional supply chains.

New Delhi is trying to diversify resources and expand trade partnerships, but analysts believe the process will take time.

A review of AITIGA could help address concerns about market access and trade rules, but alone cannot address the underlying competitiveness gap.

Maritime cooperation and regional security on the agenda

The visit also comes at a time when India and ASEAN are celebrating 2026 as the Year of ASEAN-India Maritime Cooperation.

Both sides will celebrate 35 years of dialogue and five years of their comprehensive strategic partnership in 2027.

Read also | India’s exports to West Asia are recovering from the US-Iran war shock in April-August

At the summit, the leaders are expected to review progress under the Comprehensive Strategic Partnership, including the ASEAN-India Action Plan 2026-2030, and discuss the future direction of cooperation.

Maritime security, trade and investment are expected to feature prominently in the discussions. India is also likely to push for stronger coordination among like-minded countries in the Indo-Pacific.

The East Asia Summit will bring together ASEAN members and its partner countries, including India, China, Japan, South Korea, Australia, New Zealand, the US and Russia.

The forum provides a platform for discussions on regional security, defense, geopolitical developments and economic cooperation.

Tandon said deeper engagement between India and ASEAN will help both sides build resilience amid rapid geopolitical change.

Plans for the Quad summit remain unclear

Prime Minister Modi’s visit to Manila has also drawn attention in anticipation of a possible meeting of Quad leaders comprising India, the US, Japan and Australia on the sidelines of the ASEAN summit.

The grouping includes India, the US, Japan and Australia and focuses on cooperation in the Indo-Pacific. Tandon, however, said New Delhi had no information at this stage about the planned Quad summit.

“There is also a very strong demand from the Indian community to meet the prime minister. So we are trying to accommodate that in his schedule as well,” he said.

The visit is expected to strengthen India’s diplomatic and strategic ties with Southeast Asia. But translating closer political ties into more balanced trade relations will be a more difficult task.

For New Delhi, the challenge is not only to expand trade with ASEAN, but also to boost domestic manufacturing and become a more competitive player in a region where China’s economic influence is firmly entrenched.

With input from agencies.