India's Export to ASEAN

India has strong trade relations almost all countries of the world. U.S.A., Canada, U.K., Russia, OPEC countries Brazil, South Africa, Japan, Singapore, Malaysia etc. are major trade partners of India. But trade relation with a regional grouping is more important than a country. So India has to enhance its trade with these regional groupings like European Union (EU) Association of South East Asian Nations (ASEAN) South Asian Association of Regional Co-operation (SAARC), organisation of the petroleum exporting countries (OPEC) and other Regional groupings. India has a great potential for increasing her foreign trade with ASEAN countries, because the Indian manufactures are readily acceptable in these countries. India has been trying to formulate her trade policies in such a way as may strengthen her position vis-à-vis ASEAN countries. Keeping this policy in view India extended a hand of friendship and amity towards countries after the latter had come into existence and entered into several trade agreements with them. India diverted her resources towards ASEAN region in diverse fields like economic co-operation, establishment of joint venture and co-operation in the field of science & technology. Further for boosting up exports the Indian Government adopted a liberal export policy towards the ASEAN region and developed quite cordial political relations with member countries. However, the countries of ASEAN region are divergent to each other in many respects. Several trade agreements were entered into as a result of which India's export to these countries multiplied in variety and volume.
India's exports to ASEAN mainly traditional and non-traditional items both. Traditional items consist primary products which India has been exporting to these countries over a long period of time. They include sugar, textiles, fruit and vegetables, fish and fish preparations, jute manufactures, tobacco etc. The commodity composition of Indian exports has been adopting itself to the changing requirements of ASEAN countries. As a matter of fact, India has been playing a vital role in the overall economic development of these countries and has been exporting different commodities as well as technical know how to these countries for their rapid development.
The major non-traditional products in Indian export to these countries are : Iron and steel, leather products, chemicals, paper and paper manufactures, iron ore metal manufactures, machinery and transport equipment gems and jewellery. By and large, ASEAN countries import essential capital goods and manufactured items like plant and machinery for various uses of their infrastructural development, chemical products and iron and steel etc. Thus, the imports of these items by the ASEAN countries augures well for India in extending and diversifying her existing export sector.
India's export to ASEAN reached on a peak of million US $ 4395.45 from 1429.64 US $ in 1993. But 1997 was that year in which whole south east Asian region suffered by economic crisis, resulted India export fell down upto 1750.41 million US $ in 1998. But soon ASEAN overcome to this problem and resulted Indian overall export to ASEAN picked up since than and finally it reached upto 3696.45 million US $ in 2005.
Impact of south east Asian currency crisis also affected Indian export in 1998, which was 1717.69 million US $ in 1997. Further it reached upto 753.91 million US $ in 2002 with a slow progress from 267.97 million Us $ in 1998.. The downward trend in Thai market was a natural consequence of the national policy. Secondly, Japan , U.S.A, China the Philippines and Singapore emerged as our formidable competitors. Thirdly, India has partially last her earlier comparative cost advantage as labour costs have risen substantially while Japan and other rival exporting countries have been on better footings due to the adoption of the latest sophisticated technology.
On the basis of above analysis, it is worth noting that in recent years there has been a growing tendency towards complementing Indo-ASEAN trade. India can look to ASEAN not only for markets for its exports but also for its much needed imports. India is now more particularly conscious of promoting her exports to this region. She is not only expanding the quantum of her exports to ASEAN region but is also diversifying her export items to this region. Since the economy of India is complementary to ASEAN countries India may supply to them in bulk both traditional and non traditional items. Traditional items consist mainly of spices, jute manufactures, sugar, food stuffs for animals and crude materials, mica, un-manufactured tobacco, textiles, oilseeds, and metal scrap. But recently, a variety of non-traditional items like chemical products, ferrow alloys, power generation equipment, motor vehicles, textile and leather machinery pig iron etc. Country-wise illustrative list of Indian principal export items to the ASEAN region is reproduced below :
India's Principal Export Items to ASEAN
Brunei :
Metal manufactures, footwear, textiles, spices, tea, coffee, fruit and vegetable.
Cambodia :
Auto components, Machinery and electrical appliances auto mobiles, parts and accessories of computers, Iron and steel, chemical and related products, Footwear, textiles and prepared food stuffs.
Indonesia :
Iron and steel, metal manufactures, chemicals and related products, non-metalic mineral manufactures, Machinery and transport equipment, medicine and pharmaceutical sugar and honey, textile, feeding stuffs for animals, fruit and vegetable.
Laos : Electrical products, wood and wood products, food stuffs etc.
Malaysia :
Non metallic mineral manufactures, chemical and related products, iron and steel, machinery and transport equipment, metal manufactures, Fruit and vegetables, spices, textile yarn, fabrics and made up articles, feeding stuffs for animals.
Myanmar : Pharmaceutical, primary and semi finished iron and steel, machinery and related parts, computer accessories, food stuffs, wood and wood products.
The Philippines :
Machinery and transport equipment, metal manufactures dying tanning and coloring materials, chemicals and related products, non-metalic minerals manufactures, crude vegetable materials, feeding stuffs for animals.
Singapore :
Iron and steel, cine films, machinery and transport equipment chemical and related products, medicinal and pharmaceuticals feedings stuffs for animals, fish and fish preparations, fruit and vegetable materials, spices, cereals and cereals preparations.
Thailand :
Chemical and related products, Iron and steel, machinery and transport equipment, metal manufactures, pearls, precious and semi precious stones, mineral manufactures, fish and fish preparations, feeding stuffs for animals.
Vietnam :
Pharmaceuticals, machinery and equipment, iron and steel, chemicals, lubricants and oil wheat and spices.
Presently, India's exports of traditional items to ASEAN countries have either been stagnant or declining due to import substitution. On the other hand non traditional items have exhibited enough export buoyancy and it is most prominent in the case of machinery and transport equipment, chemicals and related products, pharmaceuticals and engineering goods. Due to price competitiveness and better reputation as a punctual and resourceful supplier, USA and Japan ‘s products find a ready market in ASEAN region. India should follow suit and do her best to earn goodwill in this region.
Fortunately ASEAN countries have shown a been interest in Indian products in order to reduce the existing imbalance in trade and balance of payments position. There does exists a favourable climate with new outlets for Indian products in this region, but the present efforts need to be accentuated by developing the required infrastructure such as improvement in shipping facilities, adoption of joint marketing strategy, birding the information gap, the development of warehousing facilities etc. Moreover, there is a dire necessity of proper planning and adoption of a clear policy both by India and the ASEAN countries. The possibility of larger exports of Indian products has been observed during the period of study because some of these ASEAN countries have emerged as important buyers on account of their increasing involvement in the economic development plans. India can participate, of course with an advantage, in the infrastructural development of these countries. On the political level India's relations with ASEAN countries are by and large cordial. Why not take advantage of this favourable climate?
It is worth mentioning here that all the ASEAN countries are rightly set for their all round development. Hence they require plant, machinery, equipment and other capital goods for their industrial development which enlarge the quantum and also the pace of the total imports of ASEAN countries. India is now definitely in a position to supply a large chunk of these capital goods. She has also developed the necessary expertise and skill to provide consultancy services. Moreover India has a wide range of goods and labour-intensive technology and equipment which she can supply at rates lower than those at which it is imported from far-flung countries like the U.S.A. Thus AEAN countries offer favourable scope to India for stepping-up exports to this region. It is worth-mentioning here that all the ASEAN countries have very limited import control regulations and they import items according to their requirements, on the basis of competitive prices and better quality without any preferred sources of supply.
India can avail of the vast opportunity offered by the countries of ASEAN region and can expand and diversify her exports. She can make a worth while contribution towards the overall economic development of this region and in return effect improvement in her own trade balance.
India can avail of the vast opportunity offered by the countries of ASEAN region and can expand and diversify her exports. She can make a worth while contribution towards the overall economic development of this region and in return effect improvement in her own trade balance.