While ASEAN imports to India have expanded by more than 8% annually for the past two fiscal years, Indian exports to ASEAN have been sluggish, contracting by more than 3%. Yet New Delhi is hardly sweating over it.
India’s commerce mandarins hope that the balance of trade will swing into India’s favor once the Regional Comprehensive Economic Partnership (RCEP) agreement on services and investment takes effect. The commerce ministers of 16 East Asia Summit members are expected to meet in Kuala Lumpur next month to iron out issues related to the deal, NewsNow reported.
Services account for more than 50% of India’s gross domestic product, and Indian IT companies have a strong presence across the world. All ASEAN members except the Philippines, which considers itself a competitor of India in the IT sector, are reported to have ratified the RCEP with India.
“Once the services agreement is implemented the trade balance will change in India’s favor,” said Rahul Mishra, a research fellow dealing with Southeast Asia at the Indian Council for World Affairs (ICWA) in New Delhi.
ASEAN exports palm oil, coal, gas, coffee and rice among other commodities to India, while the latter exports machinery, yarn, pharmaceutical products and gems and jewelry. India exports motorbikes to Indonesia and Vietnam and pumps to other countries. From Thailand India imports electronic and electrical items and footwear.
Trade With Malaysia
Anil Wadhwa, Secretary (East) in Malaysia’s Ministry of External Affairs, on Sunday called for better economic and commercial ties between India and Malaysia.
“We have more than $6 billion worth of Malaysian investments in India and a further $6 billion or more has been completed by Malaysian company ties by way of projects in India,” Malaysia’s news agency ANI reported.
“Indian companies have also invested more than $2 billion in Malaysia. Our bilateral trade now stands at $13.82 billion for 2014. However, in the last couple of years, there has been a relative lull on both fronts partly due to the international economic climate and partly due to our respective country’s pre-occupation with the political process. The time to shrug this lethargy has arrived and we need to take our economic and commercial relations to the next level,” Wadhwa said while addressing the Global Business Forum in Kuala Lumpur Sunday.
Wadhwa said that the two nations should set a trade target of $100 billion by the end of this year and $200 billion by 2022.
Services and Investment, signed last year, have set the platform for future growth, he said. There is further scope for liberalization of tariff lines. The ongoing negotiations for the Regional Comprehensive Economic Partnership (RCEP) Agreement should also bring the East Asia community together.
