Page 78 - ie2 August 2019

MARKETS

consumes a significant amount of time. Table3: Indonesia’s top importers, 2018 ($ million)
So it is suggested that it should be made
digital to cut down on the time and cost. Products Major players Imports In 2018 Share (%)
Considering the three cases we have Zinc and products made of zinc 1.Korea 137.10 28.45
found that India has not reaped much 2.Australia 109.32 22.69
advantage on account of the AIFTA. Thus 3.Japan 71.38 14.81
India needs to diversify and explore much
more in the Indonesian market, under 4.India 46.71 9.69
the AIFTA. So we suggest more G2G lev- Nuclear reactors, industrial boilers and parts 1.China 646.42 41.43
el intervention to boost engineering ex- 2.Japan 289.41 18.55
ports to reduce the overall trade deficit 3.India 193.33 12.39
with Indonesia.
Motor vehicle/cars 1.Japan 967.58 32.60
Identification and diversifying our 2.Thailand 603.14 20.32
exports to Indonesia 3.India 469.68 15.82
In this regard we have conducted a thor- Auto components/parts 1.Japan 1838.41 47.72
ough analysis of trade data for both India
and Indonesia. In the analysis we have 2.Thailand 875.54 22.73
considered India’s exports to both world 3.China 331.04 8.59
and ASEAN and Indonesia’s global im- 4.USA 105.34 2.73
ports. Along with this we have taken into 5.India 90.69 2.35
consideration the present tariff schedule
under AIFTA and also most favoured na- Source: www.trademap.org
tion (MFN) rates for those products not
covered under AIFTA. Additionally we it is found that Indonesia has substantial Way forward
have looked into the tariff schedule under imports from the world and India’s pen- So what steps can India take to overcome
the China-ASEAN FTA to understand etration is comparatively low and below the trade deficit with Indonesia?
the competition faced by our products in the potential. With tariff elimination, it can be ex-
comparison to China. It was also found that in case of 51 pected that India’s exports to Indonesia
products tariff is already zero. Therefore, will increase in the short and medium
Observations it is surprising that Indian business could term. However, in order to match up to
a. In many cases while Indian exports are not utilise the duty-free access to enhance the level of China, India needs to have
subjected to tariff under AIFTA, China its penetration in Indonesia. Efforts are separate bilateral trading agreements
enjoys zero tariff under China-ASEAN required to encourage export of these with Indonesia. Plurilateral trade agree-
FTA. products and to reduce India’s trade defi- ments like AIFTA or the RCEP (which is
b. We are also of view that China enjoys cit with Indonesia. in the negotiation stage) does not always
price competitiveness advantage too on For the other 40 products there is tar- help in boosting exports, which the bi-
top of tariff advantage. For instance, it iff but for most of the products the tariff lateral does. Bilateral trade agreements
was found that in case of pipeline valves ranges between 3-5 percent. are easier to negotiate than multilateral
(HS code: 84818030), prices offered by It needs to be mentioned here that for trade agreements, since they only in-
Chinese exporters to Indonesian buyers 26 products among these 40 products, In- volve two countries. This implies they
are 15 to 20 percent less than the prices dian exports are subjected to tariff under can go into effect faster, reaping trade
offered by Indian exporters. We suggest AIFTA but Chinese exports are zero-rat- benefits more quickly.
that the government should give some in- ed. These are a cause of concern and gov- Further India needs to improve its in-
centives to the industry to offset the price ernment-level negotiations are needed frastructure and connectivity with ASE-
difference with China. for tariff elimination and further export AN. India should enhance its connec-
We have identified 91 tariff lines at promotion. tivity with ASEAN instead of dragging
8-digit level for which there is scope for In this context these 91 products are its feet. Connectivity through road, rail,
enhancement of India’s export in the In- identified as potential products for ex- maritime, and air can foster trade inte-
donesian market. For all these products ports to Indonesia. gration between Indonesia and India.

78 l INDIAN ENGINEERING EXPORTS l AUGUST 2019