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AseanAffairs Magazine July - August 2010
CONTENT • BEYOND ASEAN 
• ASEAN BAZAAR • ASEAN TALK
ASEAN AVIATION • INSIDE OUT
• ASEAN MONEY • OPINION
• ASEAN TRAVELLER • INDIA IN SPOTLIGHT

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                                                                                                                                 INDIA IN ASEAN


INDIA PLAYS ASEAN CATCH-UP WITH CHINA 
Identifying Prospects and Challenges for Indian Businesses Looking Asean 

In this issue, Asean Affairs looks at the economy of India and her relationship with Asean. India is the world’s 11th ranking economy in terms of gross domestic product in 2009, but is expected to crack the top 10 this year. Her close proximity to Asean countries through already established cultural and commercial ties seems to be a “natural fit” with Asean. Exclusive Asean Affairs interviews with business leaders and economic observers of the Indian scene and foreign companies doing business in India offer readers an in-depth look at one of the world’s fastest developing economies.

When the India-Asean Free Trade Agreement (FTA) was signed on Aug. 12, 2009 , it was widely recognized in the world business press that this was India’s last-ditch effort to counter China’s growing dominance in the region.

China’s original trade agreement with Asean was signed in November 2002 and came into full effect in January 2010. A glance at these two charts shows the disparity between China and Indian trade with Asean.
 

China as ASEAN Trade Partner
Value - Yr. 2008: in US$ million
Exports 106,976.6
Imports 85,556.5
Share to Total ASEAN
Trade - Yr. 2008:
Share in percent
Exports 12.2
Imports 10.3
India as ASEAN Trade Partner
Value - Yr. 2008: in US$ million
Exports 17,329.1
Imports 30,082.8
Share to Total ASEAN
Trade - Yr. 2008:
Share in percent
Exports 2.0
Imports 3.6
Source: ASEAN Free Trade Area (AFTA), ASEAN Merchandise Trade Statistics Database Table: www.Business-in-Asia.com Source: ASEAN Free Trade Area (AFTA), ASEAN Merchandise Trade Statistics
Database Table: www.Business-in-Asia.com

India had fallen behind China, which began talks with Asean along with India in 2003. China signed a goods agreement in 2004 and signed an investment agreement with Asean on the same day that Delhi signed the trade of goods agreement.

This puts India at a disadvantage in reducing its Asean trade imbalance because it is the world’s 10th largest exporter of services, while Asean is a net importer of services, although there is an agreement to fast-track an India –Asean services treaty.

The laggard performance of India is not unexpected. India heads the list of about 100 developing countries that stalled the stalled Doha round of talks of the World Trade Organization India has often viewed foreign trade as an import onslaught against its poor, agrarian rural population.

After strong lobbying by India’s farm sector, the terms of the FTA let India exclude 489 products, mostly commodities including rubber, from tariff cuts. Tariffs on a much smaller list of ‘’highly sensitive’’ products, including palm oil and coffee, would be reduced over about 10 years, but only modestly.......

Interviews with two of India’s leading companies who have successfully set up operations in Thailand and Asean.

O.P. Modi is a Thai national of Indian origin residing in Bangkok and an executive of India’s Aditya Birla Group. He has resided in Thailand since 1978 and devotes some of his time to philanthropic activities. Ajit Venkataraman is the CEO of Tata Motors, Thailand. Earlier, he was the Strategic Planning Director – Commercial Vehicle Business Unit of Tata Motors, India. Prior to joining Tata Motors Ltd. in 2004, he was a consultant, at A. T. Kearney.
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