The signing of the ASEAN-India trade agreement paves the way for the creation of one of the world`s largest free trade agreements – a market of nearly 1.8 billion people with a total GDP of $2.8 trillion. Under the ASEAN-India Free Trade Agreement, more than 90% of the products traded between the two dynamic regions, including so-called “special” products, such as palm oil (raw and refined), coffee, black tea and pepper, are filled with tariffs. Tariffs for more than 4,000 product lines will not be abolished until 2016 at the earliest. Agriculture can continue to be liberalized to take advantage of the benefits of free trade. (ii) products are not marketed or consumed; and while the ASEAN-India Free Trade Agreement has many advantages, India is concerned that the agreement will have several negative effects on the economy. As has already been said, both regions are trying to reduce their tariffs on a large portion of their traded products. This will allow them to increase market access for their products. However, it is criticized that India is not experiencing as large an increase in market access to ASEAN countries as ASEAN in India.  ASEAN`s economies are largely export-oriented and have high export rates to GDP (in 2007, Malaysia had a rate above 100%).  Given the above, as well as the global financial crisis and India`s expansionary domestic market, ASEAN countries are eager to consider India as the country of origin for its exports.  Recognizing this development and recognizing the economic potential for closer ties, both sides recognized opportunities to deepen trade and investment relations and agreed to negotiate a framework agreement to pave the way for the creation of an ASEAN-India Free Trade Area (FTA).  This paper analyses the impact of the ASEAN-India Free Trade Agreement (AIFTA) on agricultural trade between Member States.
Data for 50 countries with five major free trade agreements were used for 2005-2014. Gravity Model by ordinary least square and Fish Pseudo-Maximum Likelihood (PPML) methods has been estimated. The PPML method solves the problem of zero trade and heteroskedasticity in the regression model. The analysis shows a purely commercial effect of AIFTA, MERCOSUR and EU-15 in the solid impact temporal model. Under the time and country model, AIFTA, SAPTA and NAFTA have a greater effect on trade creation than the effect of trade diversion.