Enhancing India's Exports to Asean

8/14/2019 Enhancing India's Exports to Asean

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E N H A N C I N G

I N D I A - A S E A N T R A D E 1

India ASEAN bilateral trade

INDIA-ASEAN trade in 2003-04 was about US$ 13.25

billion, over 5 times the 1993-94 trade figure of US$ 2.5

billion. Indias exports to ASEAN were US$ 5.8 billion

while imports about US$ 7.4 billion in this period; balance

of trade was in favour of ASEAN.

Compared to other regional groupings, ASEAN is the

fifth most important market in the world in terms ofIndian exports and fourth in terms of imports.

ASEAN as a region has displayed great economic dynamism. ASEANs share in worldwide

exports doubled between 1980 and 2000. Further, both India and ASEAN as a whole have

attained growth in exports, at rates higher than the global average in last two decades.

Growth in Indias exports to ASEAN in recent years has been much higher in comparison

with other important destinations. Although in case of imports, those from other regions

have achieved faster growth than ASEANs imports into India.

Indian exports to ASEANmajor commodity groups

Indias exports to ASEAN include oil meals, gems and

jewellery, meat and meat preparations, cotton yarn, fabrics,

made-ups, engineering goods, transport equipment,

machinery and instruments, electronic goods, marine

products, fruits and vegetables, rice, drugs and

pharmaceuticals, chemicals, etc.

Confederation of

Indian Industry

Enhancing

India-ASEAN Trade

Table I - Indias exports to ASEAN

US$ million

Region 2002-2003 % % 2003-2004 % %

(March-April) Share Growth (March-April) Share Growth

ASEAN 4,618.54 8.7606 33.60 5,821.74 9.1189 26.05

Indias

Total Export 52,719.43 20.29 63,842.97 21.10

Source: Export Import Data Bank, Ministry of Commerce & Industry,

Government of India

Table II - Indias imports from ASEAN

US$ million

Region 2002-2003 % % 2003-2004 % %

(March-April) Share Growth (March-April) Share Growth

ASEAN 5,150.17 8,3862 17.39 7,433.16 9.5114 44.33

Indias

Total Import 61,412.13 19.45 78.149.61 27.25


Government of India

Indian imports from ASEAN majorcommodity groups

Indias imports mainly consist of artificial resins, plastic

material, natural rubber, wood and wood products,electronic goods, non-ferrous metals, metaliferous ores

and metal scrap, organic chemicals, edible oils, coal,

fertilisers, etc.


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I N D I A - A S E A N T R A D E2

Table III Relative importance ofIndias trade with ASEAN, 2002-03

US$ million

Indias Total Global Indias Total Trade Percentage share of

Trade with ASEAN Indias trade with ASEAN14,1992.58 13,254.9 9.34

Indias Total Global Indias Total Export

Export to ASEAN

63,842.97 5,821.74 9.12

Indias Total Global Indias Total Import

Import from ASEAN

78,149.61 7,433.16 9.51


Government of India

Observations:

Indias trade with the world in 2004 stood at US$ 142

billion, ASEAN accounting for 9.34 per cent (Table III)

of Indias global trade, up from 8.56 per cent last year.

However, based on the availability of data for ASEANs

global import, Indias exports to ASEAN in different

product groups are much below the potential

(Table IV). The table indicates the top ten commodity

groups that are of maximum importance in ASEANs

import basket. Percentage share of India in ASEANs

import is small.

Table IV - Percentage share ofIndias contribution to ASEAN imports

In thousand US$

S ASEANs top 10 commodities Value of Value of

No of import up to 2001 Imports Indias %

in 2001 share Share

1 Machinery and electrical 151,173,814.8 1,016,981.7 0.67

appliances

2 Mineral products 37,552,469.9 172,848.2 0.46

3 Chemicals 22,246,053.8 487,205.7 2.19

4 Base metal and metal articles 20,532,920.3 364,502.5 1.78

5 Vehicles 17,038,619.9 77,746.8 0.46

6 Textiles and apparel 11,103,916.4 234,835.5 2.11

7 Plastics 10,994,160.7 77,957.9 0.71

8 Optical, precision and

musical instruments 8,981,457.2 28,203.5 0.31

9 Prepared foodstuffs 7,140,996.6 272,826.0 3.82

10 Vegetable products 5,397,722.0 242,783.9 4.50

Note: Figures cover only Brunei Darussalam, Cambodia, Indonesia,

Malaysia, Myanmar, Philippines, Singapore and Thailand (2000 - 2001)

India must focus on the commodity groups that are

of maximum importance to ASEAN so that Indian

exports to the region may reach the

targetted level of USD 30 billion by2007.

Potential sectors for investment and

trade with India (markedly from the

manufacturing basket) are

Drugs and pharmaceuticals

Healthcare

Engineering goods

Auto components

1 Meeting with H E Mr Boungnang Vorachith,

Prime Minister of Lao Peoples Democratic

Republic, 2003

2 Mr N Srinivasan, Director General, CII and

Mr R L Narayan, Indian High Commissioner in

Malaysia with Datuk Seri Najib Tun Razak,

Deputy Prime Minister of Malaysia, 2004

3 Meeting with H E Pehin Haji Abdul Aziz,

Minister of Education and Chairman, Brunei

Investment Agency (BIA), Brunei, 1999

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Leather

Gems and jewellery

Processed food items

Trend analysis- growth in India-ASEAN trade

Compound annual growth rate (CAGR) of India-ASEAN

total trade for the period 1991-2001 has been a robust

11.1 per cent, which is more than the CAGR recorded by

1 CII Business delegation with Dato Seri Abdullah Ahmad Badavi, Prime Minister of Malaysia during Incredible India, 2003

2 CII CEOs delegation with H E Brig Gen Pyi Sone, Minister of Commerce, Union of Myanmar, 2004

3 CII / UMFCCI Second India Myanmar Joint Task Force Meeting, 2004

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Indias total trade in the same period.

CAGR calculated for the years 2001to 2004 at 17.05

per cent shows a promising increase that needs to be

further accelerated.

The potential to accelerate trade exists, but there

is need to apply greater thrust to trade in focus

sectors.

Trend in India ASEAN Trade

15

30

5.8

0

5

10

15

20

25

30

35

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Year

US$

billion

Trend in India ASEAN Trade

Growth @ 31.30 % CAGR

Source: Export Import Data

Bank, Ministry of Commerce &

Industry, Government of India


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Observations

The compounded annual growth rate (CAGR) required

to be maintained from 2004 to 2007 in order to reach

the desired trade level of US$ 30 billion in 2007 is 31.30

per cent (down from 32.38 per cent required last year.

Trade figures from the DGCI&S show that among

ASEAN members, Singapore and Malaysia have been

Indias most prominent trading partners.

There has not been any significant change in the

product composition of Indias major exports to

ASEAN since 1991-92 with the exception of electronic

goods that emerged as one of the leading export items

by 2000-01. As regards composition of Indias imports

from ASEAN, electronic goods again have turned out

as the single-most important constituent. Ediblevegetable oils also gained prominence and experienced

an extraordinary increase in the share from 6 per cent

in 1991-92 to 23 per cent in 2000-01.

Overall, product diversification in Indias imports from

ASEAN is far less than that of Indias exports to the

region. Inter-temporal changes in product composition

1 Meeting with Asian Institute of Management

(AIM), Philippines, 2003

2 Mr Ashok Soota, Past President CII with Former

President of Philippines, Mr. Fidel V Remos,

2003

3 Meeting with Phil ippines Chamber of

Commerce and Industry, 2003

While the BCLMV countries do not compare

favourably with ASEAN-5 (Indonesia, Philippines,

Malaysia, Singapore and Thailand) in trade volume,

they are also doing well on the trade front, and their

combined share in the global trade of ASEAN-10swelled up from less than 3 per cent in 1991 to over

6 per cent in 2001. This is an area where greater focus

by Indian industry especially where the products are

cost competitive, such as drugs and pharmaceuticals,

chemicals etc could yield positive results.

Recommendations

In sync with the government of Indias policies, CII has

been promoting greater Indian trade and investment in

ASEAN to benefit from AFTA and to access other Asia-

Pacific markets. To this end, CI I recommends

Enhancing Indias exports to ASEAN:

As mentioned earlier, focus should be on the sectors

that are of maximum importance to ASEAN, namely:

Machinery, engineering products

Mineral products, base metal and metal articles

highlights that while Indias exports to

ASEAN are becoming increasingly

diversified; concentration in its imports

from the region has been rising. Atthe bilateral level also, product

diversification is found to be relatively

higher for Indias exports than its

imports, excepting the case of

Thailand.

With the BCLMV countries (Brunei,

Cambodia, Laos, Myanmar and

Vietnam) Indias current trade is rather

low both in terms of absolute value

and relative share, with Myanmar being

an exception. Constraints in bilateraltrade are several including high shipping

cost, lack of contact between the

business communities, relatively lower

volume of demand and so on.

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Chemicals, drugs and pharmaceuticals

Base metal and metal articles

Transport equipment

Textiles and apparel Plastics

Optical, precision and instruments

Prepared foodstuffs

Vegetable products

Services

Enhancing ASEANs exports to India

The ASEAN-5 (Indonesia, Philippines, Malaysia,

Singapore and Thailand) may enhance exports to India

in the following categories:

Manufacturing including:

Light engineering

Electronics and electrical products, including

consumer goods

4 Meeting with Mr Lee Hsien Loong, former

Deputy Prime Minister of Singapore, 2004

5 Inauguration of CII Made in India exhibitionin Thailand, 2004

6 Luncheon meeting with Mr George Yeo,

former Minister for Trade and Industry,

Singapore 2004

Medical equipment

Computer hardware and parts

Services including:

Retail and logistics Tourism and hospitality

Food processing technology

Financial services

The BCLMV (Brunei, Cambodia, Laos, Myanmar,

Vietnam) countries have the potential to enhance

exports to India in the areas of :

Forestry and forestry produce

Agricultural products including processed food

Assembled electronic items Fuel, oil & gas, petrochemicals and their

by-products

Minerals and ores

Growth rate of India-ASEAN export has been

promising, at 33.00 per cent for the year 2002-03,

though it has declined this year to 26.05 per cent.

India-ASEAN trade must maintain

CAGR of 31.30 per cent in next

three years, to reach a target of

US$ 30 billion. The small volume of trade between

India and ASEAN is hardly an

indicator of its economic importance

to India. What is more compelling

is the fact that though the volume

of trade is small, the export basket

has potential to move up the value

chain and diversify to cater to the

emerging and growing demand in the

ASEAN countries.

Study of business opportunities in

the ASEAN region followed up by

dedicated business missions will help

fructify business partnerships in

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tandem with the Governments Look East Policy.

In this context, Indias positive engagement with

Myanmar and the recent BIMSTEC initiative will stand

India in good stead. CII has already established a task

force with Myanmar to further the existing bilateral

trade and economic relations.

Focused linkages between products and markets

between India and ASEAN will further enhance

existing linkages.

With the rising demand for products like iron and

steel, alloys and processed mineral which are driven by

large investments in infrastructure have given credibility

and competitive edge to the Indian Industry which

can be enhanced in the ASEAN region as well.

Indian heavy engineering and construction companies

with long experience of working in unfavorable

conditions with bare minimum technological support

and low cost options need to aggressively explore

business in BCLMV countries.

1 Mr Vijay Kirloskar, Chairman & Managing

Director, Kirloskar Electronic Co Ltd and

H E Nguyen Dy Nie, Minister of Foreign

Affairs, Socialist Republic of Vietnam at a

CII meeting, 2003

2 Signing of Letter of Intent between CII and

the Institute of South Asian Studies,

Singapore in the presence of H E Mr Goh

Chok Tong, former Prime Minister of

Singapore, 2004

CIIs ASEAN Focus

Develop Strategies to enhance economic, industrial

and trade relations

Identify areas of mutual cooperation

Identify issues of concern and evolve suitable policy

recommendations

Evolve guidelines and checklists for different forms

of industrial cooperation

Institutional Linkages in ASEAN

CI I has Institutional linkages with 29 counterpart

organisations in 8 ASEAN countries

Cambodia

Cambodian Investment Board

Phnom Penh Chamber of

Commerce

Indonesia

Indonesian Chamber of

Commerce and Industry Laos

Lao National Chamber of

Commerce & Industry

Malaysia

The Federation of Malaysian

Manufacturers

The Malaysian Industrial

Development Authority1

2

CI


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The Malaysian External Trade Development Board

Asian Strategy & Leadership Institute

Melaka Indian Chamber of Commerce & Industry,

Malaysia

Construction Industry Development Board

Myanmar

Myanmar Industrial Association

Myanmar Computer Federation

The Union of Myanmar Federation of Chambersof Commerce & Industry

Philippines

The Philippines Chamber of Commerce & Industry

Federation of Philippine Industries, Inc.

Asian Institute of

Management

Singapore

Infocomm Development

Authority of Singapore

Regional I nstitute of

Environment Technology

Singapore Confederation of

Industries

Singapore Productivity &

Innovation Board

Singapore-Chinese Chamber

of Commerce & Industry

Singapore Business Federation

Singapore Indian Chamber of Commerce and

Industry

Thailand

The Board of Trade of Thailand

The Federation of Thai Industries

The Board of Investment of Thailand

India Thai Chamber of Commerce

Vietnam

Foreign Trade & Investment Development Centre

Vietnam Chamber of Commerce & Industry

1 Inauguration of CII Made in India

Exhibition in Thailand, 2004

2 Meeting with Dr Thaksin Shinawatra,

Prime Minister of Thailand, 2001

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and ASEAN


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The Confederation of Indian Industry (CII) works to create and sustain an

environment conducive to the growth of industry in India, partnering industry and

government alike through advisory and consultative processes.

CI I is a non-government, not-for-profit, industry led and industry managed organisation,

playing a proactive role in Indias development process. Founded over 108 years ago,

it is Indias premier business association, with a direct membership of over 5200

companies from the private as well as public sectors, including SMEs and MNCs and

indirect membership of over 50,000 companies from 283 national and regional sectoral

associations.

A facilitator, CI I catalyses change by working closely with government on policy issues,enhancing efficiency, competitiveness and expanding business opportunities for industry

through a range of specialised services and global linkages. I t also provides a platform

for sectoral consensus building and networking. Major emphasis is laid on projecting

a positive image of business, assisting industry identify and execute corporate citizenship

programmes.

With 45 offices in India, 13 overseas in Australia, Austria, China, France, Israel, Japan,

Malaysia, Russia, Singapore, South Africa, Switzerland, UK, USA and institutional

partnerships with 239 counterpart organisations in 101 countries, CII serves as a reference

point for Indian industry and the international business community.

CII offices in ASEAN

Confederation of Indian IndustrySuite AT, Level 26, Menara IMC,

No 8, Jalan Sultan Ismail,

50250, Kuala Lumpur,Malaysia

Tel: 603-20316221 / 20394760Fax: 603-20318359 / 20394772

email: [email protected]

Southeast Asian Regional Representative OfficeConfederation of Indian Industry

47 Hill Street, # 03-02 SCCCI Building

Singapore - 179365Tel: 65-6-3334363

Fax: 65-6-8830658email: [email protected]

aboutCII

Headquarters

Confederation of Indian Industry

The Mantosh Sondhi Centre,23, Institutional Area, Lodi Road, New Delhi 110 003 (India)

Tel: 91 11 24629994-7 Fax: 91 11 24626149

email: [email protected] Website: www.ciionline.org

January 2005

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Enhancing India's Exports to Asean