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

Prime Minister Narendra Modi’s upcoming visit to Manila for the 23rd ASEAN-India Summit comes at a time when India is seeking to deepen economic engagement with Southeast Asia but faces persistent challenges: its widening 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, crossing $128 billion in 2025-26.

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

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

Trade analysts and officials have cautioned that narrowing the deficit will not be easy in the short term.

India's trade with ASEAN is closely linked to regional production networks, many of which rely on Chinese components and intermediate goods.

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

India pushes to review ASEAN trade agreement

The review 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 media briefing.

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 strengthen 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, alongside New Delhi's bilateral partnerships with individual member states.

China remains central to Southeast Asian supply chains

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

China has established a strong presence in the region's manufacturing and export networks, supplying components and intermediate goods used by industries across Southeast Asia.

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

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

A review of AITIGA could help address concerns over market access and trade rules, but it cannot, on its own, resolve the underlying competitiveness gap.

Maritime cooperation and regional security on agenda

The visit also comes as India and ASEAN observe 2026 as the ASEAN-India Year of Maritime Cooperation.

The two sides will mark 35 years of dialogue and five years of their Comprehensive Strategic Partnership in 2027.

At the summit, leaders are expected to review progress under the Comprehensive Strategic Partnership, including the ASEAN-India Plan of Action for 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, defence, geopolitical developments and economic cooperation.

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

Quad summit plans remain unclear

PM Modi's Manila visit has also drawn attention amid expectations of a possible Quad leaders' meeting involving India, the US, Japan and Australia on the sidelines of the ASEAN summit.

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

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

The visit is expected to reinforce India's diplomatic and strategic engagement with Southeast Asia. But translating closer political ties into a more balanced trading relationship will be a more difficult task.

For New Delhi, the challenge is not merely to expand trade with ASEAN, but to strengthen domestic manufacturing and become a more competitive participant in a region where China's economic influence remains firmly entrenched.