The Future of ASEAN-India Trade Looks Bright
Trade between ASEAN and India has seen strong growth over recent years. In 2014, total trade amounted to US$77 billion, a significant increase over the US$44 billion seen during 2009-10. Over the past decade, bilateral trade has increased at an average annual rate of a blistering 23 percent.
A key factor for this rising tide of trade has been India’s “Act East” policy, which has reaffirmed India’s plans to engage more substantially with the economies of its Southeast Asian neighbors. An additional reason, as pointed out by Indian External Affairs (East), Secretary Anil Wadhwa, has been the ASEAN-India Trade in Goods Agreement, which was signed in 2010.
Secretary Anil also hailed the new policy of foreign direct investment (FDI) instituted by Prime Minister Narendra Modi, which has opened up a range of investment opportunities in India, particularly in the services sector.
In addition to the abovementioned, the Indian government has instituted a range of programs intended to make the country a more attractive investment destination to foreign countries, such as those in the ASEAN region. These include:
- Facilitation of investment and innovation
- Skills development
- Building best-in-class manufacturing infrastructure for automobile, component, aviation, biotechnology, logistics, and mining
While many of the countries in ASEAN are playing an increasingly important role vis-à-vis trade with India, three of India’s key Southeast Asian trade partners are Singapore, Vietnam, and Indonesia. Singapore accounted for around 26 percent (~US$24.57 billion) of India’s trade with ASEAN in the 2013-14 period. The city-state imported US$7.1 billion worth of products from India in 2014.
Indonesia is another key market for India, with a 2014 bilateral trade of US$20 billion. Additionally, Indonesia signed a double taxation agreement with India in 2012; this has led to a notable increase in trade between the two countries. Bilateral trade between Vietnam and India in 2013-14 was worth US$8.03 billion, a number that is expected to grow to US$15 billion by 2020 as a result of official development plans from both governments.
In a further optimistic sign for future bilateral trade between ASEAN and India, business optimism has been rising throughout Southeast Asia. It is expected that this trend will help further fuel FDI into the region.
ASEAN is increasingly proving itself to be a key economic player in the region as well as globally. With its large and fast growing economy – the region saw a combined US$2.3 trillion in total GDP in 2014 – as well as its numerous beneficial trade and regulatory agreements with countries around the world, ASEAN is set to be a key global market and investment hub.
To view our in-depth library of ASEAN’s treaties with India, as well as other countries, please see here.
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