ASEAN’s digital economy takes shape as researchers call for India partnership

ASEAN’s Digital Economy Framework Agreement (DEFA) is redefining regional integration around interoperable digital infrastructure rather than trade alone, prompting researchers to argue that India needs a dedicated digital partnership with the bloc to avoid being left outside Southeast Asia’s emerging digital economy.

The Association of Southeast Asian Nations (ASEAN) concluded negotiations on DEFA in May. The agreement spans digital identity, cross-border payments, trusted data flows, ecommerce and digital trade, and has been projected by the World Economic Forum to support a $2 trillion ASEAN digital economy by 2030.

DEFA covers areas including cross-border ecommerce, digital identity, cross-border data flows, payments and digital trade. According to Karthik Nachiappan, a research fellow at the Institute of South Asian Studies (ISAS), which is part of the National University of Singapore (NUS), DEFA’s “real innovation” is managed interoperability.

Along with his co-author Atyantika Mookherjee, Nachiappan has also set out an idea for connecting India and ASEAN, arguing that DEFA provides India with a model for “deeper digital engagement” with Southeast Asia. The authors focus on a gap, one which DEFA, with its emphasis on common commercial outcomes and compatible systems, highlights.

Interoperability over harmonization

The ASEAN‑India Trade in Goods Agreement (AITIGA) remains concentrated on physical goods, and adding digital economy rules to it would complicate the ongoing review. Yet ignoring ASEAN’s digital shift risks leaving India commercially connected but digitally disconnected from the region, the authors argue.

India’s existing partnerships, such as UPI‑PayNow with Singapore and recent trade agreements with the UK and EU, demonstrates it can pursue digital integration while maintaining data governance autonomy. Asia is an enormous region with a lot of geopolitical jostling occurring. It contains one economic superpower in China, a member of the G7 in Japan, a fast-growing and increasingly robust India, and the important bloc of ASEAN.

India’s strategy of exporting digital public infrastructure is finding influence around the world, with digital public goods and the trending area of AI bolstering its footing. Indian expertise has been felt in Singapore, Indonesia and the Philippines among ASEAN members.

The October 2025-signed ASEAN-China Free Trade Area 3.0 Upgrade Protocol modernized the original 2002 agreement by expanding basic tariff cuts into digital trade, green growth and supply chain resilience. It includes commitments to promote cross-border ecommerce and digital infrastructure cooperation. Comparing with the ASEAN and China agreement, the researchers conclude that India would be disconnected from ASEAN’s new digital rules.

The authors propose a two‑track approach. First, modernize the AITIGA by digitizing trade in goods through electronic documents, interoperable customs systems and faster payments. Second, create a separate ASEAN‑India Digital Economy Partnership covering payments, digital identity, trusted data flows, privacy, cybersecurity, AI cooperation and digital skills development.

The goal would be compatibility, not regulatory uniformity, with phased implementation and capacity support. India’s choice is whether to negotiate an interoperability‑based pact that links it to ASEAN’s digital economy while preserving policy autonomy. “A two-track approach would do that better than mainstreaming a digital agreement into the AITIGA and better than leaving digital cooperation to bilateral pilots,” the authors conclude.

Article Topics

ASEAN  |  cross-border data sharing  |  digital economy  |  digital identity  |  digital public infrastructure  |  India  |  Southeast Asia