--- title: "India-ASEAN Trade Reset | Model Diplomat" description: "India seeks a trade reset with ASEAN, linking payments systems to expanded market access as Modi leverages negotiations to deepen regional economic ties." url: "https://modeldiplomat.com/story/india-asean-trade-reset-payments-link-and-market-access" --- # India-ASEAN Trade Reset Modi's strategy to enhance trade ties with ASEAN through payments. Model DiplomatMay 6, 20262 min readAsia [Kallol BhattacherjeeIndia-ASEAN ties making steady progress: Modi - The Hindu](https://www.thehindu.com/news/national/pm-modi-47th-asean-summit-virtual-address/article70204727.ece)[Press Trust of India MumbaiRBI, ASEAN to create platform for instant retail payments](https://epaper.thehindu.com/ccidist-ws/th/th_delhi/issues/89127/OPS/G9VD0HLCI.1+GB5D0JTUL.1.html)[PTILooking to fast-track trade pact review talks with ASEAN: Piyush Goyal - The Hindu](https://www.thehindu.com/business/Industry/looking-to-fast-track-trade-pact-review-talks-with-asean-piyush-goyal/article69795003.ece) ## India-ASEAN trade reset now has a payments edge *Modi is pairing a long-stalled trade review with instant payments links. India wants leverage over ASEAN market access; ASEAN gets deeper retail connectivity.* India is trying to turn a familiar complaint — an unbalanced ASEAN trade pact — into bargaining power. PM Narendra Modi said the **India-ASEAN trade agreement will be updated by year end**, while UPI will be linked with Vietnam’s payment system, according to [The Indian Express](https://indianexpress.com/article/india/india-asean-trade-pact-upi-vietnam-payment-system-pm-modi-10676408/ "indianexpress.com"). That matters because New Delhi has been pushing to fix the 2009 ASEAN-India Trade in Goods Agreement after years of widening deficits and slow-moving negotiations. In 2024-25, India’s trade deficit with ASEAN reached $45.2 billion as imports rose much faster than exports, according to [The Hindu](https://www.thehindu.com/news/national/indian-asean-officials-to-meet-beginning-august-11-for-asean-trade-in-goods-agreement-review/article69916852.ece "thehindu.com"). ## Why this is being accelerated now The leverage is coming from India’s need to diversify. Washington’s tariff pressure in 2025 sharpened the case for a faster ASEAN deal, and Indian officials have already framed the review as a way to correct asymmetry, especially rules of origin that let third-country goods move through ASEAN markets, according to [The Hindu](https://www.thehindu.com/business/Industry/looking-to-fast-track-trade-pact-review-talks-with-asean-piyush-goyal/article69795003.ece "thehindu.com"). For India, the upside is obvious: better access for exporters, less leakage from Chinese supply chains, and a broader commercial base after walking away from RCEP in 2019. ASEAN, by contrast, wants to preserve market access to a large and growing market without reopening the pact on terms that would sharply reduce its own tariff protection. For the regional backdrop, see [Global Politics](https://modeldiplomat.com/discover/general "modeldiplomat.com") and [International](https://modeldiplomat.com/discover/international "modeldiplomat.com"). ## Payments are the quieter prize The UPI-Vietnam link is the second track, and it may prove easier to deliver than tariff renegotiation. India has already been moving on cross-border retail payments through [Project Nexus](https://epaper.thehindu.com/ccidist-ws/th/th_delhi/issues/89127/OPS/G9VD0HLCI.1+GB5D0JTUL.1.html "epaper.thehindu.com"), a BIS-backed platform meant to connect fast-payment systems across India, Singapore, Malaysia, Thailand and the Philippines. Vietnam joining that broader logic would give New Delhi a practical digital footprint in Southeast Asia, while giving ASEAN states cheaper remittances, faster tourism payments and more direct settlement rails outside Western card networks. The beneficiaries are India’s fintech ecosystem, the RBI’s internationalization push, and ASEAN governments that want financial connectivity without a full-blown trade concession. ## What to watch next The next test is whether the “by year end” promise survives the hard parts: rules of origin, tariff schedules and sectoral exclusions. Watch the next AITIGA negotiating round and whether India can show one concrete payment linkage — not just a political announcement — before the year ends. If it can, Modi will have turned ASEAN into both a trade offset and a digital showcase. 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