While appreciating ASEAN’s (Association of Southeast Asian Nations) engagement in the forthcoming India’s Republic Day Celebrations, Anil Khaitan, President, PHD Chamber of Commerce and Industry said that India – ASEAN relationship have improved towards a new trajectory in the recent times.
The bridge between ‘Look East’ and ‘Act East’ policy has been reinforced through constant dialogue between the two groups, said Khaitan.
However, trade between India and ASEAN economies is lackluster which requires a serious attention to gain from ASEAN–India Free Trade Area (AIFTA) trade agreement which was signed in 2010, Khaitan further said.
According to a recent study conducted by PHD Research Bureau, PHD Chamber of Commerce and Industry, “Analysis of Trade Pattern between India and ASEAN”, India’s trade pattern with ASEAN has witnessed a shift during the pre and post ASEAN – India Free Trade Agreement (AIFTA).
The total trade between India and ASEAN grew only from USD 52.6 billion in 2010 to USD 64.6 billion in 2016, wherein India’s exports to ASEAN grew from USD 22.96 billion to USD 26.38 billion and India’s imports increased from USD 29.64 billion to USD 38.22 billion during the same period, Khaitan informed.
India’s export growth to ASEAN during pre-AIFTA stood at a CAGR of 23.39% whereas import growth stood at a CAGR of 23.71% during 2003-09. However, during the post-AIFTA regime, India’s export growth to ASEAN stood at a CAGR of 2.34% and an import growth of CAGR 4.33% during 2010-16, he added.
The trade trajectory between India and ASEAN witnessed a shift in significance for each other’s market. Given the magnanimous size of trade volume between ASEAN and World, role of India has remained lackluster in ASEAN’s market, said Khaitan.
India has an insignificant presence in ASEAN’s top 10 imports, wherein ASEAN imported around 11.8 billion valued imports from India, accounting for a share of 1.57% of overall imports of USD 752.35 billion from world during 2016, he added.
Of the total imports of top 10 products valuing at USD 265 billion by India, ASEAN group has a very strong significance with a share of 10.47%, valuing at USD 27.76 billion during 2016, added Khaitan.
The primary reason for growing trade deficit between India and ASEAN has been the design of the trade relationship between two groups. ASEAN has greater trade complementarities with India, indicating more aligned export pattern of ASEAN with the import pattern of India, said Khaitan.
However, the products which has India’s good strengthens are not in the import preference of ASEAN economies though India has good presence in the world market.
ASEAN as an entire region imports 3.9% of the world’s natural and cultured pearls and precious stones, 3.2% of world’s vehicles, and 2% of world’s pharmaceutical products among others.
The major bottlenecks constraining the performance of Indian exports in the ASEAN market is the imposition of stringent non-tariff barriers by ASEAN economies.
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.
Going ahead, India needs to check the bottlenecks in terms of non-tariff barriers and take serious steps as ASEAN can be a good market of more than 600 million people.