India and Indonesia: A Resilient Trade Partnership Amid Geopolitical Shifts
ASHUTOSH DUBEY
Climate Change Policy Marker?? AND Founding Editor - kanishksocialmedia-BROADCASTING MEDIA PRODUCTION COMPANY,LEGAL PUBLISHER
Keywords: India, Indonesia, ASEAN, trade relations, AIFTA, economic liberalization, bilateral trade, Look East Policy, Act East Policy, ASEAN-India Trade in Goods and Services Agreements,
The trade relationship between India and Indonesia has steadily grown, supported by India’s economic liberalization in the 1990s and strategic policies like the Look East and Act East Policy. These initiatives significantly bolstered India’s engagement with Southeast Asia and fostered stronger trade ties, particularly with ASEAN nations. Central to this growth has been the ASEAN-India Free Trade Agreement (AIFTA) and the ASEAN-India Trade in Goods and Services Agreement (AITIGA), which facilitated the lowering of tariffs and improved market access.
The Evolution of India-Indonesia Trade
Initially, Indonesia lagged behind Singapore and Malaysia in trade volume with India. However, by 2003, Indonesia's trade with India surged to US$ 3.2 billion, surpassing Malaysia. This progress continued as India’s engagement with ASEAN deepened, and by 2010, Indonesia emerged as one of India’s top 10 trading partners. The implementation of AIFTA played a significant role in this rise, pushing the total trade volume to US$ 15.6 billion, driven by key sectors such as refined petroleum, coal briquettes, and palm oil.
The growth trajectory continued, and by 2022, Indonesia became India's sixth-largest trading partner, surpassing Singapore. Despite the positive trade relations, challenges remain, particularly in bilateral investments and trade facilitation between the two countries.
Current Trade Dynamics (2019-2024)
Analyzing India’s trade patterns with Indonesia, Singapore, and the rest of the world over the past five years provides insight into the evolving dynamics between India and Southeast Asia. While Indonesia has made significant gains in trade with India, Singapore still holds the top spot in India's ASEAN trade relations. However, Indonesia's continued growth reflects its increasing role as a strategic partner in India's economic and geopolitical strategy.
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Conclusion
As India continues to strengthen its ties with Southeast Asia through economic and diplomatic engagement, Indonesia's role as a key trading partner is expected to grow further. Despite the challenges in trade and investments, the resilience of this bilateral relationship demonstrates the significance of Indonesia in India's broader economic agenda.
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