Page 76 - ie2 August 2019

MARKETS

INDIA-INDONESIA ENGINEERING TRADE

HE top 10 engineering products Table2: India-Indonesia bilateral engineering trade ($ million)
India exported to Indonesia in
T2018-19 are given in Table3. The 2015-16 2016-17 2017-18 2018-19 CAGR %
major engineering import items from India’s engg exports to Indonesia 839.48 1405.61 1753.58 2331.33 40.6
Indonesia includes iron and steel, copper India’s engg imports from Indonesia 1130.4 1128.29 1246.54 1494.1 9.7
and products, tin and products, nuclear BOT -290.92 277.32 507.04 837.23
reactors, industrial machinery for dairy Source: www.commerce.nic.in
and agriculture, products of iron and
steel, motor vehicles/cars, electric ma- Table2: India’s top 10 engineering exports to Indonesia ($ million)
chinery and equipment and so on. 2018-19
Evidently, the two nations comple- Ships, boats and floating structures 734.6
ment each other in a number of areas. Motor vehicle/cars 369.56
Trade meetings and delegation-level talks
could do more to promote better trade, Iron and steel 275.81
and government-to-government contact Industrial machinery for dairy, agriculture, food processing, textiles, paper, chemicals, etc 173.06
would reassure the business community Electric machinery and equipment 166.59
of both countries. Auto components/parts 118.75
Nuclear reactors, industrial boilers and parts 103.29
India-Indonesia trade agreements Products of iron and steel 58.73
India at present trades with Indonesia Air condition and refrigeration machinery and parts, industrial furnaces, water heaters and 52.74
under the ASEAN-India FTA (AIFTA). centrifuges and compressor
The AIFTA is a free trade area among the Zinc and products made of zinc 28.62
10 member states of the Association of Source: www.commerce.nic.in
Southeast Asian Nations (ASEAN) and
India. The initial framework agreement exports to Indonesia have increased but positive balance of trade in the case of
was signed on 8 October 2003 in Bali, In- not considerably. On the other hand In- engineering goods all through, barring
donesia and the final agreement was on dia’s imports from Indonesia has almost just 2015-16.
13 August 2009. The free trade area came doubled post FTA from $8.66 million in Thus there has been a positive effect of
into effect on 1 January 2010. 2009-10 to $15.84 million in 2018-19, the FTA, which has resulted in increase of
The two countries have committed to registering a CAGR of 9 percent over India’s engineering exports to Indonesia
improve bilateral cooperation through a the years from 2008-09 to 2018-19. This as seen from Figure2
strategic partnership which was formed disparity in export-import growth rates
in 2005. On these lines, the two coun- have led to the increase in trade deficit Observation: Thus India’s rising trade
tries are in the process of negotiating a which is reflected in the last 11 years. deficit with Indonesia is due to the surge
Comprehensive Economic Cooperation in merchandise imports, which has in-
Agreement (CECA). Impact of FTA on engineering creased manifold as seen from Figure1.
trade Has the FTA strengthened India’s posi-
Impact of FTA on merchandise India’s engineering exports to Indonesia tion as an engineering export partner in
trade has increased post AIFTA from $753.6 Indonesia?
We see from Figure1 that India’s mer- million in 2009-10 to $2331.3 million in So now we try to find the position of In-
chandise exports and imports vis-à-vis 2018-19, registering a CAGR of 15 per- dia as a supplier of engineering goods to
Indonesia has increased over the years cent over the years from 2008-09 to 2018- Indonesia in the global context.
from 2008-09 to 2018-19. India’s total 19. India’s engineering imports have
exports to Indonesia have increased from also increased considerably from $296.6 Indonesia’s engineering imports
$2.56 million in 2008-09 to $5.28 mil- million in 2009-10 to $1494.1 million in and India’s share
lion in 2018-19, registering a CAGR of 7 2018-19, registering a CAGR of 22 per- Case1: India ranks among the top 5
percent. We find that post AIFTA India’s cent. However India has maintained a For the product groups shown in Table3,

76 l INDIAN ENGINEERING EXPORTS l AUGUST 2019