PHD Chamber report points to increasing trade gaps between India and East Asian nations
Coinciding with the India-ASEAN commemorative summit, marking 25 years of bilateral relations next week, industry captains have asked for increasing trade between India and the East Asian nations.
Lauding Prime Minister Narendra Modi's engagement with ASEAN leaders, Anil Khaitan, President of the PHD Chamber of Commerce and Industry said the trade between two economies was lacklustre and requires serious attention. In an unprecedented move, PM Modi has invited 10 ASEAN leaders for this year's Republic Day Parade. They will be also part of commemorative summit to reinforce the PM's Act East policy. The event is also aimed at consolidating India's position as an investment destination in the region.
But a comprehensive report released by the PHD Chamber of Commerce here on Saturday highlighted concerns like increasing trade gaps between India and ASEAN. While this gap has been attributed to the design of the trade, the major bottlenecks identified in the research included constraining the performance of Indian exports, the stiff competition from China and imposition of stringent non-tariff barriers.
"Proliferation of non-tariff measures (NTMs) in the ASEAN market has contained the economic integration of Indian products in ASEAN. According to WTO database, between 2000 and 2015, non-tariff measures in ASEAN rose from 1,634 to 5,975, especially for the developing countries," the report added. The 10-members of ASEAN included Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. The non-member states called ASEAN plus three included China, Japan and South Korea. India is part of East Asia Summit that also includes Australia, New Zealand, Russia and the US. The economies of 10 ASEAN countries, if treated as a single entity, would rank as the 3rd largest economy in Asia and 7th largest in the world.
The report pointed out that China was the biggest exporters to ASEAN in majority of the products. "India's engagement in ASEAN has been hindered by the enhanced competitiveness of Chinese products such as electrical equipment, mechanical appliances, plastics, iron and steel and organic chemicals among others," it added.
India's exports to ASEAN has witnessed a drop from $37.89 billion in 2013 to $26.38 billion in 2016. India's imports declined from $42.31 billion to $38.22 billion during 2016, despite enacting free trade agreement. India's trade deficit has also grown by 24.69%, from $1.62 billion to $6.07 billion, during the same period. The report believes that India has an insignificant presence in ASEAN's top ten imports, wherein ASEAN imported around 11.8 billion valued imports from India, accounting for a share of 1.57% of overall imports of $752.35 billion from world during 2016.
The report has asked for conditions to allow Indian businessmen to target the common market of more than 600 million people by asking countries to ease up tariff rates. "Indian companies can manufacture in the region and take the advantage of the free flow of goods when exporting finished goods. Moreover, Indian domestic manufacturers could rely on ASEAN nations for intermediate goods and other raw materials in their supply chain to benefit from reduced costs in goods," the report recommended.
China threat
- Report points out that China was the biggest exporter to ASEAN in majority of the products.
- India’s exports to ASEAN had dropped from $37.89 bn in 2013 to $26.38 bn in 2016.
- India has insignificant presence in ASEAN’s top 10 imports, the report says.
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