EEPC

Chapter 3
PHILIPPINES

u ASEAN-India Comprehensive Economic Cooperation Agreement: Signed and in effect from 2010
u ASEAN-Japan Comprehensive Economic Partnership: Signed and in effect from 2008
u ASEAN-People’s Republic of China Comprehensive Economic Cooperation Agreement: Signed and in effect
from 2005
u ASEAN-Republic of Korea Comprehensive Economic Cooperation Agreement: Signed and in effect from 2007
u Japan-Philippines Economic Partnership Agreement: Signed and in effect from 2008
u Philippines-European Free Trade Association Free Trade Agreement: Signed and in effect from 2018
B. FTAs/PTAs under negotiation or proposed/under study
u ASEAN-Canada FTA: Proposed/under study
u ASEAN-EU Free Trade Agreement: Proposed/under study
u ASEAN-Eurasian Economic Union Free Trade Agreement: Proposed/under study
u ASEAN-Pakistan Free Trade Agreement: Proposed/under study
u Australia-Philippines Free Trade Agreement: Proposed/under study
u Comprehensive Economic Partnership for East Asia (CEPEA/ASEAN+6): Proposed/under study
u East Asia Free Trade Area (ASEAN+3): Proposed/under study
u Free Trade Area of the Asia Pacific: Proposed/under study
u India-Philippines PTA: Proposed/under study
u Pakistan-Philippines Free Trade Agreement: Proposed/under study
u Philippines-Canada Free Trade Agreement: Proposed/under study
u Philippines-Chile Free Trade Agreement: Proposed/under study
u Philippines-EU Free Trade Agreement: Negotiations launched in 2015
u Philippines-Mexico Free Trade Agreement: Proposed/under study
u Philippines-Taipei, China Economic Cooperation Agreement: Proposed/under study
u Philippines-United States Free Trade Association: Proposed/under study
u Republic of Korea-Philippines Free Trade Agreement: Negotiations launched in 2019

100

u Regional Comprehensive Economic Partnership (involving 10 ASEAN member nations, China, Japan, South
Korea, Australia, New Zealand and India): Negotiations launched in 2013, other 15 countries have signed but
negotiations with India are ongoing.

Link: https://aric.adb.org/fta

V. EXISTING FTA WITH INDIA

The ASEAN-India FTA in Goods came into existence in the year 2010. The agreement became further comprehensive
with the signing of the agreement on trade in services and investment. Further information can be obtained in the link:
https://commerce.gov.in/international-trade/trade-agreements/india-asean-agreements

VI. INDIA’S TRADE RELATIONS WITH PHILIPPINES

Bilateral merchandise trade between India and the Philippines increased by over 21 percent between 2016 and 2018
to reach $2.36 billion in 2018 but then declined to below $2 billion by 2020 due to economic slowdown in some of
the emerging economies followed by the pandemic. Philippines engineering trade with India also declined in 2020 due
to the same reason after exhibiting a rising trend between 2017 and 2019. The following table shows bilateral trade
figures for the last five completed years.

A. India’s merchandise trade with Philippines ($ billion)
CAGR of exports: -1% ; CAGR of imports: 1.53%

1.47
0.48

1.58
0.71

1.75
0.62

1.64
0.56

1.42
0.51

2016 2017 2018 2019 2020

India’s total merchandise export to Philippines India’s total merchandise import from Philippines

Source: ITC Trade Map

Chapter 3
PHILIPPINES

B. India’s engineering trade with Philippines ($ billion)
CAGR of Exports: -4.06% ; CAGR of Imports: 2.97%

0.55
0.14

0.63
0.18

0.64
0.13

0.67
0.1

0.47
0.15

2016 2017 2018 2019 2020

India’s total engineering export to Philippines India’s total engineering import from Philippines

Source: ITC Trade Map

C. India’s share in Philippines’ total import basket: Merchandise vis-à-vis engineering (%)

2.5 2.14 2.03 2
2.08

2 1.81

1.5 1.72 1.61 1.52 1.45 1.56
1

0.5

0
2016 2017 2018 2019 2020

India’s share in Philippines’ global merchandise import basket India’s share in Philippines’ global engineering import basket

Source: ITC Trade Map

102

D. Potential items of export to Philippines in engineering and India’s position

India is the 13th-largest exporter of engineering goods to the Philippines with around 2 percent share in the Philippines’
global engineering imports. India’s major engineering items exported to Philippines include two and three wheelers,
iron and steel and its products, auto components/parts, motor vehicle/cars, electric machinery and equipment. and
industrial machinery among others.

India’s trade complementarity index with respect to Philippines in engineering has been estimated at 65.2 percent,
which is reflective of a high match in India’s export pattern of engineering goods to Philippines’ import pattern of those
goods. Listed here is India’s share in Philippines’ engineering imports across different engineering segments/product
groups that reflects India’s scope to enhance its exports.

Potential sectors for bilateral trade and investment

Unit Philippines’ average imports from India’s share in Philippines’
world (2018-20) import basket (%)
Ships, boats and floating structures 145.92 0.00
Railway transport and parts 58.19 0.18
Aircrafts, spacecrafts and parts 2331.14 0.21
Machine tools 486.49 0.24
Copper and products made of copper 838.00 0.41
Motor vehicle/cars 5104.30 0.89
Air condition and refrigeration machinery and
parts, industrial furnaces, water heaters and 1048.79 0.90
centrifuges and compressor
Cranes, lifts & winches 628.29 1.02
Electric machinery and equipment 3072.12 1.16
Industrial machinery for dairy, agriculture,
food processing, textiles, paper, chemicals, 2749.36 1.20
etc
Products of iron and steel 1875.66 2.10
Other construction machinery 666.14 2.36
Iron and steel 4137.01 2.63
Nuclear reactors, industrial boilers and parts 509.05 4.01
Two and three wheelers 1252.21 10.32

Source: ITC Trade Map

Chapter 3
PHILIPPINES

VII. CONNECTIVITY BETWEEN INDIA AND PHILIPPINES

A. Air connectivity

The Union Cabinet of India approved the signing of the revised bilateral air service agreements between India and
Philippines, making way for enhanced and seamless connectivity for carriers of India and Philippines. Direct air
connectivity between these the nations is now likely to be established.

B. Port Connectivity

There are a number of ports in Philippines. Manila is the busiest among them while other major ports are Cebu,
Batangas, and Subic among others. The following table shows the distance from India’s three major ports to Manila
seaport and the travel time.

Location of port in India Distance with Manila Port Time taken to reach
(nautical miles) (days)
Chennai
Kolkata 3459 14.4
Mumbai
Source: ports.com 3586 14.9

4205 17.5

VIII. INVESTMENT RELATIONSHIP WITH INDIA

As per the Ministry of External Affairs, Government of India, estimated Indian investments in the Philippines are
valued at more than $900 million as on September 2019 spread across sectors like textiles, IT & ITES, infrastructure
(airports), chemicals, automobiles, and pharmaceuticals. During the last few years, Indian companies have
successfully executed some small and medium sized projects in the Philippines.

Philippines investment in India has been estimated at $335.40 million between April 2000 and December 2020.
Areas of investments include telecommunications, IT, real estate, and reprocessing of waste and human resource
development (management education).

A. Potential sectors for Indian companies in Philippines

• IT : Non-voice sectors, particularly in medical, financial, and legal services, game development, engineering
design in manufacturing, software development

• Pharma : Generics, medical equipment, vaccine, OTC, oncology and high end medicines, herbal medicines,
etc

• Infrastructure : Airports, ports, railways, roads etc – through the PPP route

104

• Manufacturing : Electronics, shipbuilding, tools and dyes, furniture, garments, power and transport
• Automobiles
• Renewable Energy (RE) sector
• Agribusiness : Cacao, coffee, mangoes, bananas, coconuts, rubber, bamboo, fruits and nuts, palm oil and
other high value crops.
• Tourism: Hotels, services, management etc
• Services and logistics.

Source: MEA, Govt of India; DIPP, Govt of India; Embassy of India in Manila

IX. INDIA, PHILIPPINES DIPLOMATIC MISSIONS

Embassy of India
Ambassador: H.E. Mr Shambhu S Kumaran
Address: 2190 Paraiso Street, Dasmarinas Village
Makati City, Metro Manila, Philippines
Telephone: +63-2-88430101-02; +63-2-88434-048
Fax: +63-2-88445757; +63-2-88927301; +63-2-88158151

Embassy of the Philippines
Ambassador: H.E. Mr Ramon S Bagatsing,
Jr (Ambassador Extraordinary and Plenipotentiary)
Address: 50N Nyaya Marg, Chanakyapuri
New Delhi 110 021, India
Email: [email protected]

SINGAPORE

I. KEY COUNTRY FACTS

Population :
5.77 Million

Languages spoken:
English, Mandarin, Malay, Chinese

Currency
Singapore Dollar (SGD)

Country code:
+ 65

II. ECONOMIC PERFORMANCE
A. GDP at current prices ($ billion)

390 375.96 374.39 15.00%
380 9.5% 10.00%
370 7.7% 339.98 5.00%
360 343.32 2018 0.00%
350 -0.4% -5.00%
340 2017 -10.00%
330 -9.2% -15.00%
2019 2020
318.75
320
310
300
290

2016

GDP at Current price Growth
Source: https://www.imf.org/en/Publications/WEO/weo-database/2021/April/select subjects?c=582

106

B. Per capita GDP at current prices ($)

68000 66,675.77 9.0% 10.00%
66000 7.6% 65,641.31

64000 5.00%

62000 61175.43

60000 -1.6% 58,902.22 0.00%
58000 -5.00%
56000 56846.27

54000 -10.3% -10.00%

52000 -15.00%
2020
50000
2016 2017 2018 2019

Per Capita GDP Growth

C. Inflation (average CPI), percentage change

0.8

0.6 0.57 0.57

0.44

0.4

0.2

0 2017 2018 2019 2020
2016 -0.18

-0.2

-0.4 -0.53
-0.6

Source: https://www.imf.org/en/Publications/WEO/weo-database/2021/April/select-subjects?c=582

Chapter 3
SINGAPORE

III. GLOBAL TRADE
A. Total merchandise exports vis-à-vis total merchandise imports ($ billion)

412.08
370.94

390.39
359.01

373.91
328.82

2018 2019 2020
Total Merchandise Export Total Merchandise Import
Source: ITC Trade Map

B. Total engineering exports vis-à-vis total engineering imports ($ billion)

83.11
83.74
84.85
87.86
78.54
72.85

2018 2019 2020

Source: ITC Trade Map Total Engineering Export Total Engineering Import

108

C. Key rankings

Parameter Rank
Ease of Doing Business, 2020 2
Global Competitiveness Index, 2019 1
Global Innovation Index, 2020 1

Source: Ease of Doing Business Rankings taken from https://www.doingbusiness.org/en/rankings?region=east-asia-and-pacific

Global Competitiveness Index Rankings taken from http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf

Global Innovation Index taken from https://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2020-intro4.pdf , jointly published by Cornell
University, WIPO and INSEAD

IV. EXISTING FREE TRADE AGREEMENTS

There are 25 FTAs in force and 15 more FTAs under negotiation or proposed/under study where Singapore is a
participating country either as an individual nation or as a member nation of ASEAN. Both the lists are furnished here
separately.

A. FTAs in force
u ASEAN Free Trade Area: Signed and in effect from 1993
u ASEAN-Australia and New Zealand Free Trade Agreement: Signed and in effect from 2010
u ASEAN-Hong Kong, China Free Trade Agreement: Signed and in effect from 2019
u ASEAN-India Comprehensive Economic Cooperation Agreement: Signed and in effect from 2010
u ASEAN-Japan Comprehensive Economic Partnership: Signed and in effect from 2008
u ASEAN-People’s Republic of China Comprehensive Economic Cooperation Agreement: Signed and in effect
from 2005
u ASEAN-Republic of Korea Comprehensive Economic Cooperation Agreement: Signed and in effect from 2007
u Australia-Singapore Free Trade Agreement: Signed and in effect from 2003
u Comprehensive and Progressive Agreement for Trans-Pacific Partnership: Signed and in effect from 2018
u India-Singapore Comprehensive Economic Cooperation Agreement: Signed and in effect from 2005
u Japan-Singapore Economic Agreement for a New-Age Partnership: Signed and in effect from 2002

Chapter 3
SINGAPORE

u New Zealand-Singapore Closer Economic Partnership: Signed and in effect from 2001
u People’s Republic of China-Singapore Free Trade Agreement: Signed and in effect from 2009
u Republic of Korea-Singapore Free Trade Agreement: Signed and in effect from 2006
u Singapore-Costa Rica Free Trade Agreement: Signed and in effect from 2013
u Singapore-EU Free Trade Agreement: Signed and in effect from 2019
u Singapore-European Free Trade Association Free Trade Agreement: Signed and in effect from 2003
u Singapore-Gulf Cooperation Council Free Trade Agreement: Signed and in effect from 2013
u Singapore-Panama Free Trade Agreement: Signed and in effect from 2006
u Singapore-Peru Free Trade Agreement: Signed and in effect from 2009
u Singapore-Taipei, China FTA: Signed and in effect from 2014
u Singapore-Turkey FTA: Signed and in effect from 2017
u Singapore-United States Free Trade Agreement: Signed and in effect from 2004
u Sri Lanka-Singapore Free Trade Agreement: Signed and in effect from 2018
u Trans-Pacific Strategic Economic Partnership Agreement: Signed and in effect from 2006

110

B. FTAs under negotiation or proposed/under study
u ASEAN-Canada FTA: Proposed/study
u ASEAN-EU Free Trade Agreement: Proposed/under study
u ASEAN-Eurasian Economic Union Free Trade Agreement: Proposed/under study
u ASEAN-Pakistan Free Trade Agreement: Proposed/under study
u Comprehensive Economic Partnership for East Asia (CEPEA/ASEAN+6): Proposed/under study
u East Asia Free Trade Area (ASEAN+3): Proposed/under study
u Eurasian Economic Union (EEU)-Singapore Free Trade Agreement: Signed in 2019 but not yet in effect
u Free Trade Area of the Asia Pacific: Proposed/under study
u Pakistan-Singapore Free Trade Agreement: Negotiations launched in 2005
u Singapore-Canada Free Trade Agreement: Negotiations launched in 2001
u Singapore-Egypt Comprehensive Economic Cooperation Agreement: Negotiations launched in 2006
u Singapore-MERCOSUR Free Trade Agreement: Negotiations launched in 2018
u Singapore-Mexico Free Trade Agreement: Negotiations launched in 2000
u Singapore-Ukraine Free Trade Agreement: Negotiations launched in 2007
u Regional Comprehensive Economic Partnership (involving ten ASEAN member nations, China, Japan, South
Korea, Australia, New Zealand and India): Negotiations launched in 2013, other 15 countries have signed but
negotiation with India is ongoing.

Link: https://aric.adb.org/fta

V. EXISTING FTAS WITH INDIA

1. India-Singapore Comprehensive Economic Cooperation Agreement that came into force in the year 2005

2. The ASEAN-India FTA in goods came into existence in the year 2010 where Singapore is one of the
participating countries as a member nation of ASEAN. The agreement became further comprehensive with
the signing of the agreement on trade in services and investment. Further information can be obtained in the
link: https://commerce.gov.in/international-trade/trade-agreements/india-asean-agreements/

Chapter 3
SINGAPORE

VI. INDIA’S TRADE RELATIONS WITH SINGAPORE

Singapore is the largest trade partner of India among the ASEAN member nations and India is at present the 17th-
largest supplier of engineering products to Singapore among all nations. India’s merchandise exports to Singapore
jumped by over 45 percent and bilateral trade surged by over 80 percent between 2016 and 2019 before declining
in 2020 due to the impact of the pandemic on economic activities. India’s engineering exports to Singapore almost
doubled between 2016 and 2019 but then declined in 2020 following the pandemic. The illustrations show bilateral
trade figures for the last five completed years.
A. India’s merchandise trade with Singapore ($ billion)
CAGR of Exports: 2.95% ; CAGR of Import: 16.33%

14.48 14.89

11.6 12.31
7.23
10.49 10.74

7.38 8.3
6.72

2016 2017 2018 2019 2020

India’s total merchandise export to Singapore India’s total merchandise import from Singapore

Source: ITC Trade Map

112

B. India’s engineering trade with Singapore ($ billion)
CAGR of Exports: 7.27% CAGR of Imports: 24.91%

1.94
1.42

2.73
1.24

1.93
3.5
3.87
3.92

2.57
3.47

2016 2017 2018 2019 2020

India’s total engineering export to Singapore India’s total engineering import from Singapore

Source: ITC Trade Map

C. India’s share in Singapore’s total import basket: Merchandise vis-à-vis engineering (%)

5 4.41
3.52
4.5
3.93

4

3.5 2.99

2.83 3.54 2.83
3
2.52

2.5

2 2.61 2.3

1.5

1

0.5

0 2019 2020
2016 2017 2018 India’s share in Singapore’s global engineering import basket

India’s share in Singapore’s global merchandise import basket

Source: ITC Trade Map

Chapter 3
SINGAPORE

D. Potential items of export to Singapore in engineering and trade complementarity

Singapore is the 4th-largest destination of India’s engineering exports across the globe. Major engineering product
items exported to Singapore include electric machinery and equipment; aircrafts, spacecrafts and parts; aluminium
and products made of aluminium; industrial machinery; and zinc products among others.

India has a high trade complementarity index of 51.2 percent with Singapore that necessarily indicates significant
scope for enhancing engineering trade as more than half of Indian engineering exports matches with the requirements
(imports) of Singapore.

India’s share in Singapore’s global engineering imports across potential sectors where substantial scope exists for
higher exports are listed here.

Potential sectors for bilateral trade and investment ($ million)

Units Singapore’s average imports from India’s share in Singapore’s
world (2018-20) import basket (%)
Bicycle & parts 683.62 0.11
Copper and products made of copper 852.95 0.35
Motor vehicle/cars 1694.89 0.46
Medical and scientific instruments 7292.31 0.68
Air condition and refrigeration machinery and
parts, industrial furnaces, water heaters and 1754.04 0.79
centrifuges and compressor
Machine tools 722.45 0.96
Auto components/parts 1863.98 1.03
Cranes, lifts & winches 1628.28 1.09
Pumps of all types 909.25 1.19
Products of iron and steel 3382.24 1.54
Iron and steel 2454.88 1.75
Aircrafts, spacecrafts and parts 10059.28 1.77
Electric machinery and equipment 22380.44 1.89
Industrial machinery for dairy, agriculture,
food processing, textiles, paper, chemicals, 5724.82 2.00
etc
IC engines and parts 1343.75 2.28

Source: ITC Trade Map

114

VII. CONNECTIVITY BETWEEN INDIA AND SINGAPORE

A. Air connectivity :

Singapore is well connected to India through aerial routes as Singapore’s Changi airport has direct flights from several
major airports of India.

B. Port connectivity :

The major seaport and container port of Singapore that includes several terminals is well connected to leading ports of
India. The details are given here.

Location of port in India Distance with the Port of Singapore Time taken to reach (days)
(nautical miles)
Chennai 7.9
Kolkata 1891 8.4
Mumbai 11.0
2009

2637

Source: ports.com; https://www.ship-technology.com/projects/portofsingapore

VIII. INVESTMENT RELATIONSHIP WITH INDIA

Singapore is the second-largest source of foreign direct investment (FDI) inflow into India after Mauritius. Cumulative
FDI inflow into India from Singapore between April 2020 and December 2020 was recorded at $113.39 billion that
accounted for nearly 22 percent of India’s global FDI inflow till end-2020. However, Singapore replaced Mauritius to
become the largest source of FDI for India on a yearly basis during the last three fiscal years.

Chapter 3
SINGAPORE

India has Double Taxation Avoidance Agreements (DTAA) with Singapore and Mauritius separately that yield ‘zero’
capital gains tax for foreign direct investors investing in India through these two countries. This advantage induced
many leading global investors to invest in India through Singapore and Mauritius routes.

Singapore, on the other hand, is one of the top destinations for Indian investments. As per the latest release of the
Ministry of External Affairs, Government of India, India’s outward FDI to Singapore was $67.64 billion between January
2008 and December 2019.

About 9000 Indian companies are registered in Singapore. Six PSUs, nine Banks, India Tourism, CII, FICCI, Air India,
Jet Airways have their offices in Singapore. DBS Bank announced the launch of its locally incorporated subsidiary, DBS
Bank India (DBIL) in March 2019. On the other hand, more than 440 companies from Singapore are registered in India.
Two Banks, Enterprise Singapore (ES), Economic Development Board (EDB), and Singapore Tourism Board have their
offices in India.

Source: MEA, Govt of India; DIPP, Govt of India

IX. INDIA, SINGAPORE DIPLOMATIC MISSIONS

High Commission of India
High Commissioner: H.E. Mr P Kumaran
Address: 31 Grange Road, Singapore 239 702
Telephone: +65-6737 6777
Emergency consular assistance: +65-91729803 (after office hours)
Fax: +65-6732 6909
Email: [email protected]
URL: https://www.hcisingapore.gov.in/

High Commission of the Republic of Singapore
High Commissioner: H.E. Mr Simon Wong
Address: E-6 Chandragupta Marg
Chanakyapuri, New Delhi 110 021,India
Telephone: +91-11-4600-0800
Emergency tel (after hours): +91-981-020-3595
Fax: +91-11-4601-6413
Email: [email protected]
URL: https://www.mfa.gov.sg/new-delhi

116

Thailand

I. KEY COUNTRY FACTS

Population :
69.8 Million

Languages spoken:
Thai, Malay, Burmese

Currency
Thai Baht (THB)

Country code:
+ 66

II. ECONOMIC PERFORMANCE

A. GDP at current prices ($ billion)

600 506.4 544.15 501.89 15.00%
10.9% 7.5% 10.00%
500 456.52
413.49 10.4%

400 5.00%

300 0.00%

200 -7.8% -5.00%
2020 -10.00%
100
2017 2018 2019
0 GDP at Current price Growth
2016

Source: https://www.imf.org/en/Publications/WEO/weo-database/2021/April/select subjects?c=582

Chapter 3
THAILAND

B. Per capita GDP at current prices ($)

9,000.00 6,596.22 7,293.8190.6% 7,815.41 7,190.37 15.00%
8,000.00 10.0% 7.2% 10.00%
7,000.00
6,000.00 5,995.21 5.00%
5,000.00 2016
4,000.00 0.00%
3,000.00
2,000.00 -8.0% -5.00%
1,000.00 2020 -10.00%

0.00

2017 2018 2019
Per Capita GDP Growth

C. Inflation (average CPI), percentage change

1.5 0.665 1.1 0.7 2020
2017 2018 2019 -0.8
1

0.5
0.188

0
2016

-0.5

-1

Source: https://www.imf.org/en/Publications/WEO/weo-database/2021/April/select-subjects?c=582

118

III. GLOBAL TRADE
A. Total merchandise exports vis-à-vis total merchandise imports ($ billion)

249.92
251.1
245.38
240.14
229.28
208.62

2018 2019 2020

Source: ITC Trade Map Total Merchandise Export Total Merchandise Import

B. Total engineering exports vis-à-vis total engineering imports ($ billion)

130.34
129.4
126.53
128.17
116.73
113.67

2018 2019 2020

Source: ITC Trade Map Total Engineering Export Total Engineering Import

Chapter 3
THAILAND

C. Key rankings

Parameter Rank
Ease of Doing Business, 2020 21
Global Competitiveness Index, 2019 40
Global Innovation Index, 2020 44

Source: Ease of Doing Business Rankings taken from https://www.doingbusiness.org/en/rankings?region=east-asia-and-pacific

Global Competitiveness Index Rankings taken from http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf

Global Innovation Index taken from https://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2020-intro4.pdf , jointly published by
Cornell University, WIPO and INSEAD

IV. EXISTING FREE TRADE AGREEMENTS

Thailand has in total 15 FTAs which are signed and in-effect. Some of these are bilateral while others have been
signed as a member of ASEAN. The list is given here.

u ASEAN Free Trade Area
Link: https://aric.adb.org/fta/asean-free-trade-area

u ASEAN-Korea Comprehensive Economic Cooperation Agreement
Link: https://aric.adb.org/fta/asean-korea-comprehensive-economic-cooperation-agreement

u ASEAN-Japan Comprehensive Economic Partnership
Link: https://aric.adb.org/fta/asean-japan-comprehensive-economic-partnership

u ASEAN-Hong Kong, China Free Trade Agreement
Link: https://aric.adb.org/fta/asean-hongkong-china-free-trade-agreement

u ASEAN-China Comprehensive Economic Cooperation Agreement
Link: https://aric.adb.org/fta/asean-peoples-republic-of-china-comprehensive-economic-cooperation-
agreement

u ASEAN-Australia and New Zealand Free Trade Agreement
Link: https://aric.adb.org/fta/asean-australia-and-new-zealand-free-trade-agreement

u Australia-Thailand Free Trade Agreement (TAFTA)
Link: https://aric.adb.org/fta/thailand-australia-free-trade-agreement

u Japan-Thailand Economic Partnership Agreement,
Link: https://aric.adb.org/fta/japan-thailand-economic-partnership-agreement

120

u Thailand-Chile Free Trade Agreement
Link: https://aric.adb.org/fta/thailand-chile-free-trade-agreement
u Thailand-Peru Free Trade Agreement
Link:https://aric.adb.org/fta/thailand-peru-free-trade-agreement
u Thailand-Bahrain Free Trade Agreement
Link: https://aric.adb.org/fta/thailand-bahrain-free-trade-agreement
Other than these FTAs as a member of ASEAN, Thailand is also part of the negotiations in the Regional
Comprehensive Economic Partnership (RCEP), Comprehensive Economic Partnership for East Asia, and East Asia
Free Trade Area.

Link: https://aric.adb.org/fta/regional-comprehensive-economic-partnership

V. EXISTING FTA WITH INDIA

The ASEAN-India FTA in goods came into existence in the year 2010. The agreement became further comprehensive
with the signing of the agreement on trade in services and investment. Further information can be obtained in the link:
https://commerce.gov.in/international-trade/trade-agreements/india-asean-agreements/
India and Thailand are also part of the BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic
Cooperation). BIMSTEC is a sector-driven organisation consisting of the adjacent and littoral states lying in the periphery
of the Bay of Bengal. These include India, Bangladesh, Bhutan, Nepal, and Sri Lanka from South Asia and Myanmar and
Thailand from the ASEAN region. The six initial focus sectors include trade, technology, energy, transport, tourism, and
fishery. Further information can be obtained in the link: https://bimstec.org

Chapter 3
THAILAND

VI. INDIA’S TRADE RELATIONS WITH THAILAND

Between 2016 and 2020, India’s total trade with Thailand increased by 2%. During the same time India’s total
engineering trade with Thailand increased by almost 1%. In 2020, Thailand became the 21st-largest merchandise
export destination for India and 18th-largest engineering export destination.

A. India’s merchandise trade with Thailand ($ billion)
CAGR of exports: 6.3%; CAGR of imports: -0.47%

2.96
5.32

3.59
6.45

4.4
7.67

4.33
7.03

3.78
5.22

2016 2017 2018 2019 2020

India’s total merchandise export to Thailand India’s total merchandise import from Thailand

Source: ITC Trade Map

122

B. India’s engineering trade with Thailand ($ billion)
CAGR of Exports: 14.88%, CAGR of Imports: -4.06%

0.89
3.01

1.26
3.49

1.64
3.75

1.69
3.54

1.55
2.55

2016 2017 2018 2019 2020

India’s total engineering export to Thailand India’s total engineering import from Thailand

Source: ITC Trade Map

C. India’s share in Thailand’s total import basket: Merchandise vis-à-vis engineering (%)

2.00% 1.80% 1.81%
1.32% 1.36%
1.80% 1.51% 1.60% 1.75%
1.60% 1.27%

1.40%

1.20% 1.04%
1.00%
0.80% 0.81%

0.60%

0.40%

0.20%

0.00%

2016 2017 2018 2019 2020
India’s share in Thailand’s engineering import basket
India’s share in Thailand’s merchandise import basket

Source: ITC Trade Map

Chapter 3
THAILAND

D. Potential items of export to Thailand in engineering and India’s position

In engineering, India is the 14th-largest supplier to Thailand.The major export items include machinery and parts, metals,
and automobiles. The two countries have a significantly high trade complementarity index of 73.68 in engineering
which implies there is a significant scope for intraregional trade. India’s share in Thailand’s engineering imports sector-
wise are listed here.

Potential sectors for bilateral trade and investment ($ million)

Units Thailand's imports from world avg India’s share in Thailand’s import
(2017-19) basket (%)
Iron and steel 11632.96 2.06
Electric machinery and equipment 8610.27 1.21
Products of iron and steel 7180.14 1.36
Auto components/parts 6834.01 2.96
Industrial machinery for dairy, agriculture,
food processing, textiles, paper, chemicals, 6209.89 1.36
etc
Copper and products made of copper 4343.87 0.43
Aluminium and products made of aluminium 3724.14 2.74
IC engines and parts 3118.02 9.50
Aircrafts, spacecrafts and parts 2984.46 0.02
Medical and scientific instruments 2751.86 0.78
Air condition and refrigeration machinery and
parts, industrial furnaces, water heaters and 2732.38 2.79
centrifuges and compressor
Motor vehicle/cars 1666.98 1.61
Cranes, lifts & winches 1435.32 0.55
Machine tools 1355.44 0.51
Hand tools, cutting tools and implements
made of metals 1326.78 1.00
Other non ferrous metals and their products
Ships, boats and floating structures 1289.45 1.65
Pumps of all types 1110.75 0.58
Other construction machinery 891.58 1.88
Nuclear reactors, industrial boilers and parts 795.01 2.42
Zinc and products made of zinc 782.86 2.08
Accumulator and battery 464.6 10.16
Machinery for ATMs, injecting moulding 358.41 4.60
machinery, valves
346.14 2.73

124

Two and three wheelers 289.92 2.05
Lead and products made of lead 272.19 15.61
Railway transport and parts 196.6 0.27
Bicycle & parts 166.6 0.18
Office equipments 109.75 6.63

Source: ITC Trade Map

VII. CONNECTIVITY BETWEEN INDIA AND THAILAND

A. Mekong-India Economic Corridor

Involves integrating the four Mekong region countries – Vietnam, Myanmar, Cambodia, and Thailand. It is planned to
connect Ho Chi Minh City (Vietnam) with Dawei (Myanmar) via Bangkok (Thailand) and Phnom Penh (Cambodia) and
further linking to Chennai in India.

B. Port connectivity

There are three major ports in Thailand along with numerous smaller ports. The nearest biggest port to India is the Port
of Bangkok (Klong Toey).

Location of port in India Distance with Klong Toey Port Time taken to reach (days)
(nautical miles)
Chennai 11.5
Kolkata 2767 12.1
Mumbai 14.6
Source: ports.com 2894

3513

C. Road connectivity

India has already proposed to expand the India-Myanmar-Thailand Trilateral Highway.

D. Air connectivity

Air connectivity between India and Thailand is growing with more than 330 flights per week. All major airlines of
India operate between the two countries: Air India, Jet Airways, Thai Airways, Bangkok Airways, Air Asia, IndiGo and
Spicejet. India and Thailand are cooperating closely on improving regional connectivity through initiatives such as India-
Myanmar-Thailand Trilateral Highway, Asian Highway Network (under UNESCAP), BTILS under BIMSTEC framework.

Chapter 3
THAILAND

VIII. INVESTMENT RELATIONSHIP WITH INDIA

India’s investment in Thailand is approximately $14 million. Thailand on the other hand has investment of approximately
$93 million in India. Investment from Thailand in India has increased in the recent years. Thai investments are mainly
in infrastructure, real estate, food processing sectors, chemicals, and hotel and hospitality sector.

Source: MEA

IX. INDIA, THAILAND DIPLOMATIC MISSIONS

Embassy of India
Ambassador: H.E. Ms Suchitra Durai
Address: 46 Prasarnmitr, Soi 23,
Sukhumvit, Bangkok 10110, Thailand
Telephone: +66-2-2580300-05

Embassy of Thailand
Ambassador: H.E. Ms Pattarat Hongtong
Address: 56-N Nyaya Marg, Chanakya Puri
New Delhi 110 021, India
Telephone: +91-11-24197200

126

VIETNAM

I. KEY COUNTRY FACTS
Population :
97.4 Million

Languages spoken:
Vietnamese, English, French

Currency
Vietnam Dong (VND)

Country code:
+ 84

II. ECONOMIC PERFORMANCE
A. GDP at current prices ($ billion)

400 9.9% 9.7% 329.53 340.82 12.00%
8.4% 10.00%
350 277.074 304.01 3.4% 8.00%
2020 6.00%
300 4.00%
252.149 2.00%
0.00%
250
2017 2018 2019
200 GDP at Current price Growth

150

100

50

0
2016

Source: https://www.imf.org/en/Publications/WEO/weo-database/2021/April/select subjects?c=582

Chapter 3
VIETNAM

B. Per capita GDP at current prices ($)

4,000.00 8.7% 8.6% 3415.45 3498.97 10.00%
3,500.00 2,957.93 6.4% 9.00%
3,000.00 2,720.19 3211.46 2.4% 8.00%
2,500.00 2016 2020 7.00%
2,000.00 6.00%
1,500.00 5.00%
1,000.00 4.00%
3.00%
500.00 2.00%
0.00 1.00%
0.00%

2017 2018 2019
Per Capita GDP Growth

C. Inflation (average CPI), percentage change

4 3.52 3.54 2.79 3.22
3.5 2017 2018 2019 2020

3 2.66
2.5

2
1.5

1
0.5

0
2016

Source: https://www.imf.org/en/Publications/WEO/weo-database/2021/April/select-subjects?c=582

128

III. GLOBAL TRADE
A. Total merchandise exports vis-à-vis total merchandise imports ($ billion)

243.69
236.86

264.61
253.44

348.02
280.31

2018 2019 2020
Total Merchandise Export
Source: ITC Trade Map Total Merchandise Import

B. Total engineering exports vis-à-vis total engineering imports ($ billion)

62.85 66.69 70.38

45.33

34.69 36.48

2018 2019 2020

Source: ITC Trade Map Total Engineering Export Total Engineering Import

Chapter 3
VIETNAM

C. Key rankings

Parameter Rank
Ease of Doing Business, 2020 70
Global Competitiveness Index, 2019 67
Global Innovation Index, 2020 42

Source: Ease of Doing Business Rankings taken from https://www.doingbusiness.org/en/rankings?region=east-asia-and-pacific

Global Competitiveness Index Rankings taken from http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf

Global Innovation Index taken from https://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2020-intro4.pdf , jointly published by
Cornell University, WIPO and INSEAD

IV. EXISTING FREE TRADE AGREEMENTS

Vietnam has in total 12 FTAs which are signed and in-effect. Some of these are bilateral while others have been
signed as a member of ASEAN. The list is given here.

u ASEAN Free Trade Area
Link: https://aric.adb.org/fta/asean-free-trade-area

u ASEAN-Korea Comprehensive Economic Cooperation Agreement
Link: https://aric.adb.org/fta/asean-korea-comprehensive-economic-cooperation-agreement

u ASEAN-Japan Comprehensive Economic Partnership
Link: https://aric.adb.org/fta/asean-japan-comprehensive-economic-partnership

u ASEAN-Hong Kong, China Free Trade Agreement
Link: https://aric.adb.org/fta/asean-hongkong-china-free-trade-agreement

u ASEAN-China Comprehensive Economic Cooperation Agreement
Link: https://aric.adb.org/fta/asean-peoples-republic-of-china-comprehensive-economic-cooperation-
agreement

u ASEAN-Australia and New Zealand Free Trade Agreement
Link: https://aric.adb.org/fta/asean-australia-and-new-zealand-free-trade-agreement

u Comprehensive and Progressive Agreement for Trans Pacific Partnership including Vietnam,Australia,
Canada, Japan, Mexico, New Zealand and Singapore
Link: https://aric.adb.org/fta/comprehensive-and-progressive-agreement-for-trans-pacific-partnership

u Vietnam-EU Free Trade Agreement
Link: https://aric.adb.org/fta/viet-nam-european-union-free-trade-agreement

130

u Korea-Vietnam Free Trade Agreement
Link: https://aric.adb.org/fta/korea-viet-nam-free-trade-agreement
u Vietnam-Chile Free Trade Agreement
Link: https://aric.adb.org/fta/chile-viet-nam-free-trade-agreement
u Japan-Vietnam Economic Partnership Agreement
Link:https://aric.adb.org/fta/japan-viet-nam-economic-partnership-agreement
u Vietnam-Eurasian Economic Union Free Trade Agreement
Link: https://aric.adb.org/fta/viet-nam-customs-union-of-russia-belarus-and-kazakhstan-free-trade-
agreement
Other than these FTAs as a member of ASEAN, Vietnam is also part of the negotiations in the Regional Comprehensive
Economic Partnership (RCEP), Comprehensive Economic Partnership for East Asia, and East Asia Free Trade Area. Link:
https://aric.adb.org/fta/regional-comprehensive-economic-partnership

V. EXISTING FTA WITH INDIA

The ASEAN-India FTA in goods came into existence in the year 2010. The agreement became further comprehensive
with the signing of the agreement on trade in services and investment. Further information can be obtained in the link:
https://commerce.gov.in/international-trade/trade-agreements/india-asean-agreements/

VI. INDIA’S TRADE RELATIONS WITH VIETNAM

Between 2016 and 2020, India’s total trade with Vietnam increased by 4%. During the same time India’s total
engineering trade with Vietnam increased by almost 14%. In 2020, Vietnam became the 15th-largest merchandise
export destination for India and 13th-largest engineering export destination.

Chapter 3
VIETNAM

A. India’s merchandise trade with Vietnam ($ billion)
CAGR of exports: -7% ; CAGR of imports: 15%

5.95
3.19

8.11
4.14

6.71
7.24

5.51
7.44

4.5
5.56

2016 2017 2018 2019 2020

India’s total merchandise export to Vietnam India’s total merchandise import from Vietnam

Source: ITC Trade Map

B. India’s engineering trade with Vietnam ($ billion)

CAGR of Exports: 23% CAGR of Imports: 5%

0.75
0.81
1.43
1.13
0.99
1.51
1.83
1.47
1.73
0.97

2016 2017 2018 2019 2020
India’s total engineering import from Vietnam
India’s total engineering export to Vietnam

Source: ITC Trade Map

132

C. India’s share in Vietnam’s total import basket: Merchandise vis-à-vis engineering (%)

4.00% 3.40% 3.80% 2.88% 2.70% 2.50%
3.50% 1.40% 2.40% 1.60% 2.17% 1.60%
3.00%
2.50%
2.00%
1.50%

1.00%

0.50%

0.00%
2016 2017 2018 2019 2020

India’s share in Vietnam’s merchandise import basket India’s share in Vietnam’s engineering import basket

Source: ITC Trade Map

Chapter 3
VIETNAM

D. Potential items of export to Vietnam in engineering and India’s position

In engineering, India is the 11th-largest supplier to Vietnam. The major export items include metals, auto components,
machinery and parts, and automobiles. The two countries have a significantly high trade complementarity index of
56.33 in engineering which implies there is a significant scope for intraregional trade. India’s share in Vietnam’s
engineering imports, sector-wise, is listed here, giving an idea as to the areas where India needs to improve its share.

Potential sectors for bilateral trade and investment ($ million)

Unit Vietnam’s imports from world avg India’s share in Vietnam’s Import
(2017-19) basket (%)
Machine tools 1706.15 0.2
Copper and products made of copper 3168.36 0.32
Cranes, lifts & winches 1276.87 0.4
Other non ferrous metals and their products 1045.07 0.6
Aluminium and products made of aluminium 3943.65 0.66
Products of iron and steel 3635.85 0.79
Medical and scientific instruments 2715.83 1.08
Air condition and refrigeration machinery and
parts, industrial furnaces, water heaters and 2402.58 1.1
centrifuges and compressor
Other construction machinery 680.7 1.61
Electric machinery and equipment 8041.86 1.65
Motor vehicle/cars 2367.38 1.65
Industrial machinery for dairy, agriculture,
food processing, textiles, paper, chemicals, 9195.68 1.75
etc
IC engines and parts 1022.44 2.01
Auto components/parts 2048.18 3.58
Iron and steel 11320.21 6.93

Source: ITC Trade Map

134

VII. CONNECTIVITY BETWEEN INDIA AND VIETNAM

A. Mekong-India Economic Corridor

Involves integrating the four Mekong region countries – Vietnam, Myanmar, Cambodia, and Thailand. It is planned to
connect Ho Chi Minh City (Vietnam) with Dawei (Myanmar) via Bangkok (Thailand) and Phnom Penh (Cambodia) and
further linking to Chennai in India.

B. Port connectivity :

There are six major ports in Vietnam along with numerous smaller ports. The nearest biggest port to India is located in
Ho Chi Minh City.

Location of port in India Distance with Ho Chi Minh City Port Time taken to reach (days)
(nautical miles)
Chennai 11
Kolkata 2630 11.5
Mumbai 14.1
Source: ports.com 2756

3376

C. Road connectivity :

India has already proposed to expand the India-Myanmar-Thailand Trilateral Highway to include Cambodia, Laos, and
Vietnam.

D. Air connectivity :

Vietnam is connected to all major airports in India.

Chapter 3
VIETNAM

VIII. INVESTMENT RELATIONSHIP WITH INDIA

India’s investment in Vietnam is approximately $1.9 billion including those routed through third countries. According to
the Vietnam’s Foreign Investment Agency there are 294 Indian projects in Vietnam in sectors including energy, mineral
exploration, auto components, and agro processing.
Vietnam on the other hand has six investment projects in India with an estimated investment of $28.55 million in the
areas of IT, pharmaceuticals, chemicals, and building materials.

Source: MEA and DIPP factsheet

IX. INDIA, VIETNAM DIPLOMATIC MISSIONS

Embassy of India
Ambassador: H.E. Mr Pranay Verma
Address: 63 Tran Hung Dao Street
Haon Kiem District, Hanoi, Vietnam
Telephone: +84-913089165/ +84-915989065

Embassy of Vietnam
Ambassador: H.E. Mr Pham Sanh Chau
Address: 20 Kautilya Marg, Block C
Diplomatic Enclave, Chanakyapuri
New Delhi, India
Telephone: +91-11-26879868

136

CHAPTER 4

Connecting India with ASEAN

4.1 INTRODUCTION

Connectivity is a major area of convergence for the Association of Southeast Asian Nations (ASEAN) and India. It is
important because it promotes trade, brings people closer, and integrates the economies. Improving connectivity is
essential for a region’s prosperity, continued growth, and, most importantly, for poverty reduction. Improved connectivity
lowers costs and increases reliability. It is of great importance for industrial transport and thus for production, cost
effectiveness, and reliability of supply. India is the third country after Japan and China to initiate a dedicated meeting with
the ASEAN Connectivity Coordinating Committee (ACCC). India currently is working with ASEAN on multiple connectivity
projects, through land, water, and air.
In 2010, the East Asia Summit (EAS) leaders adopted a comprehensive strategy for smart, sustainable, and inclusive
growth. At the 17th ASEAN Summit in 2010, these leaders adopted the Master Plan on ASEAN Connectivity, which
identifies key strategies and actions to enhance the region’s connectivity in three dimensions: physical, institutional, and
people-to-people. It shows the way ahead for Asia in regional integration. Asia’s aim of single market depends on the
existence of a seamless, flexible, and efficient logistics and transportation system. At present, the market is fragmented
and is often an obstacle to free flow of goods and services, and the administrative or technical barriers in the market
result in expensive mobility within Asia.

4.2 NEED, BENEFITS OF ENHANCED CONNECTIVITY

One of the major obstacles to the expansion of trade between India and ASEAN is the high cost of moving goods across
borders. Improved connectivity would reduce trade costs, raise the country’s comparative advantage and trade flows,
expand markets, reduce poverty, and enhance the country’s welfare and quality of life of its citizens. Multiple effective
cross-border and national transport projects mean stronger ASEAN-India connectivity. An integrated connectivity would
also provide substantial benefits to landlocked and small island countries of the region as well as to poor and small
countries by giving them low-cost access to world markets. Better connectivity between India and ASEAN can infuse
new dynamism in the region’s production network. Stronger production network would enhance trade and investment,
and thereby deepen the East Asian integration process. To sustain the regional production network, we need to improve
trade costs and the country’s comparative advantage in trade. The catalyst to a regional production network is lowering
trade costs. ASEAN-India connectivity would help unlock the tremendous potential of the region by removing constraints

138

and bottlenecks to growth. At this very initial stage, the emerging regional physical overland connectivity architecture
between India and ASEAN is showing two important features: first, national connectivity having regional implications such
as Delhi-Mumbai Industrial Corridor (DMIC); and second, the regional connectivity showing regional (or international)
implications such as Mekong-India Economic Corridor (MIEC),Trilateral Highway (TH) between India, Myanmar, and
Thailand, along Asian Highway (AH) No.1, and Kaladan Multimodal Transit Transport Project (KMTTP).

4.3 MAJOR CONNECTIVITY PROJECTS

In order to enhance the physical connectivity between India and ASEAN, various research sources suggested two major
axes that could be promoted to enhance connectivity: the first is overland connectivity through India’s Northeast Region
(NER); and the second, the multimodal connectivity through southern India, primarily through the Chennai-Ennore
area. The prioritised projects from the list of key actions stipulated under the various regional cooperation projects –
especially those that will have high and immediate impact on ASEAN-India connectivity – are listed here.

u Chennai-Ennore Port Road Connectivity Project
u National Highway Development Programme (NHDP), Phase VI
u Dedicated Freight Corridor (DFC) projects
u Linking Chennai with DFC projects
u Capacity augmentation of airports in Tamil Nadu and Northeast India
u Capacity augmentation of seaports in Tamil Nadu
u Delhi-Mumbai Industrial Corridor (DMIC)
u Development of Chennai-Bangalore-Mumbai Industrial Corridor (CBMIC)
u Completion of the feasibility study of PRIDe (Peninsular Region Industrial Development) corridor
u Completion of the missing links of India-Myanmar-Thailand Trilateral Highway
u Completion of the feasibility study of Delhi-Hanoi Railway Link (DHRL)
u Kaladan Multimodal Transit Transport Project (KMTTP)
u Development of Mekong-India Economic Corridor (MIEC)
u Setting-up of dry ports in India’s Northeast

Other projects, such as a railway link between New Delhi in India to Hanoi in Vietnam; the Mekong-India Economic
Corridor (MIEC) connecting South and Southeast Asia; and Stilwell Road and Dawei deep-seaport in Myanmar are

Chapter 4

Commerce pedestrian border between Myanmar and India in the small village of Rihkhawdar

under consideration. The MIEC involves the integration of four Mekong countries – Vietnam, Myanmar, Thailand, and
Cambodia – along with India, connecting Ho Chi Minh City, Dawei, Bangkok, and Phnom Penh with Chennai. The
corridor will provide opportunities for the participant countries to develop infrastructure, enhance their economic base
with the region, and especially reduce the transit distance between India and ASEAN countries.
Giving substance to ASEAN-India relations through connectivity will gradually change the geopolitical landscape of
this region. Exploring opportunities through connectivity projects will not only curb existing insurgencies, but also help
India’s northeastern states to develop their economic potential and integrate with mainland India. These projects will
also help India to remove physical impediments to trade with ASEAN countries and further integrate the two regions for
better economic and security relations.

140

4.4 IMT TRILATERAL HIGHWAY

The India-Myanmar-Thailand-Trilateral Highway is a highway currently under construction as part of India’s Look East
Policy. Upon its completion, it will connect Moreh in India with Mae Sot in Thailand via Myanmar. By linking other
highways in other East Asian countries such as Vietnam and Laos, it is believed this project will boost economic growth
in the region.

4.4.1 Background

The trilateral highway was first proposed during a ministerial meeting in Yangon in April 2002. The approximate length
of the highway is 1360 km. The 160-km-long India-Myanmar Friendship Road linking Moreh-Tamu-Kalmeya-Kalewa
forms part of the trilateral highway. Having been built by the Border Roads Organisation (BRO), it was inaugurated on
13 February 2001. The BRO maintained it until 2009 when full ownership was transferred to Myanmar. Regarding the
Friendship Road project, it was initially agreed between India and Myanmar that the Indian government would widen the
existing roads in the area while Myanmar would upgrade single-lane bridges in the route. But the Myanmar government
failed to do so. In May 2012, it was announced that India would repair the existing roads and as well as the 71 bridges
in the region around the Friendship Road project.

During Myanmar President U Htin Kyaw’s state visit to India in August 2016, an MoU was signed with the Government
of India under which the latter will fund the construction of 69 bridges, including approach roads in the Tamu-Kyigone-
Kalewa section (149.7 km). India provided funding for the renovation of 73 bridges along the route in Myanmar that
were originally built during World War II. On February 2017, Myanmar accepted a proposal from the Thai government
to repair a 68-km road between Mon State and Ein Du in Kayin State. This repair will be funded by Thailand at a cost
of $51 million. Myanmar also requested assistance repairing other sections of the road In May 2017, it was proposed
by the NITI Aayog to establish a special purpose vehicle involving all three countries to closely monitor the project. India
and ASEAN have plans to extend the trilateral highway route to Laos, Cambodia, and Vietnam as this connectivity will
generate annually, an estimated $70 billion in incremental GDP and 20 million in incremental aggregate employment
by 2025.

4.4.2 Travel arrangements in trilateral highway

A motor vehicles Agreement along with protocols for regulating and facilitating the movement of cargo and passenger
vehicular traffic is under inter-governmental negotiations between India, Myanmar, and Thailand. India initiated a
preliminary survey to determine the feasibility of establishing a rail link parallel to the trilateral highway in January
2018. Japan expressed interest in collaborating with India and funding the proposed rail link.

Chapter 4

4.4.3 Status of route upgrades
The status of the upgrade of various segments of the highway according to the Ministry of Development of the Northeast
Region is given here.

The upgrade status of routes of IMT trilateral highway

Stretch Distance (km) Status
Moreh-Tamu-Kalewa 149.7 Completed in 2017
Kalewa-Yagyi 120.74 Being upgraded, estimated completion on June 2021
Yagyi-Chaungma-Monywa 64.4 Completed
Monywa-Mandalay 136 Completed
Mandalay-Meiktila bypass 123.13 Completed in 2010
Meiktila bypass-Taungoo-Oktwin-Payagyi 238 Completed in 2010
Payagyi-Theinzayat (Thein Za Yat)-Thaton 140 Completed in 2017
Thaton-Mawlamyine-Kawkareik 134.4 Currently undergoing up-gradation
Kawkareik-Myawaddy 25.6 Completed in 2015
Myawaddy-Mae Sot 20 Currently under upgradation. The stretch is complete on Thai
side but Myanmar side still facing delay due to land acquisition
issues

4.5 MODES OF CONNECTIVITY

4.5.1 Road

One of the flagship projects for land connectivity between ASEAN and India is the India-Myanmar-Thailand Trilateral
Highway. This initiative, which connects the three countries from Moreh in India, to Mae Sot in Thailand, to Bagan in
Myanmar, was first proposed in 2002. Besides this, the India, Myanmar, and Thailand Motor Vehicles Agreement (IMT
MVA) is in the final stage. On realisation, this will become the first-ever cross-border facilitation agreement between
South and Southeast Asia, thus allowing free movement of cargo, passenger, and personal vehicles along the roads
linking these three countries. ASEAN countries and India have to identify the missing links and investment needs from a
region-wide perspective. To a great extent, missing roadways in Myanmar is hindering the overland connectivity between
India and ASEAN. Therefore, Myanmar’s average road conditions need to be improved. For efficient movement of larger
vehicles, roads leading from Myanmar to India and Thailand need to be widened and maintained properly. Development
of economic corridors connecting countries in the region will facilitate investments as well as spur economic growth
of India’s southern and northeastern regions as well as of Myanmar and Mekong. The proposed connectivity between
ASEAN and India would throw many challenges for its development. The link would open considerable avenues and
opportunities for trade between the regions.

142

4.5.2 Maritime

To develop connectivity through water, ASEAN and India are working on the Kaladan Multi-Modal Transit Transport
Project (KMMTTP). The project was initiated by the Indian government in 2008 and is entirely funded by India. The
purpose is to seek an alternative route through Myanmar for the transportation of goods to the northeast region of India.
The KMMTTP connects Kolkata in India to Sittwe and Paletwa in Myanmar by sea and river respectively. A road is also
planned to connect Paletwa in Myanmar to Zorinpui on the India-Myanmar border.

Alongside this initiative, India has contributed to build a sea link via Sittwe port in Myanmar in order to enable an
alternative transit route through Bangladesh. Since ports and waterways are responsible for the flow of the merchandise
trade between ASEAN and India, investment in quality infrastructure is essential for better connectivity, trade growth,
and maximum utility of resources. Indian ports are heading for a better future with growing international trade. Thus,
operational efficiency of the ports have to be competitive and on par with the best ports in the world. Modern cargo
handling techniques must be introduced to improve port performance. Efforts must be made to enhance the quality of
service and productivity levels.

4.5.3 Air

While upgradation of the Chennai and Kolkata airports (both domestic and international terminals) is in progress, it is
essential to have second airports for both these cities. On the issue of air connectivity, select ASEAN countries have
direct flights to first- and second-tier cities in India, but there is ample scope for improvement. India in the past had
announced a line of credit of $1 billion to encourage such connectivity projects between India and ASEAN, and a Project
Development Fund of Rs5 billion ($78 million) with an aim to promote manufacturing hubs in the CLMV countries.

4.5.4 Rail

In the context of Indian Railways, technological upgradation and modernisation of the current assets is essential for
realising maximum benefits. Timely completion of the western and eastern DFCs would provide significant boost to
economic development in the region and bring confidence for planning of other DFCs along the trunk routes. Plans for
Chennai-Bangalore-Mumbai Industrial Corridor must be evolved by closely studying best practices from DMIC project
and similar projects developed elsewhere in the world.

Chapter 4

4.6 CHALLENGES TO INDIA-ASEAN CONNECTIVITY

The challenges that need to be addressed in the region include, to mention a few, poor quality of roads and incomplete
road networks, missing links in road and railways, and inadequate maritime and aviation infrastructure. In the rail
sector, track gauges, voltages, and signalling systems differ from one country to another. Similarly, in the road sector,
highway lanes, lighting system, and quality of roads differ across countries in Asia. The port facilities in some countries
are well equipped with technical and electronic equipment, whereas in many countries of the region ports still belong to
the ancient period and are far away from automation and modernisation. While runways in some airports accommodate
bigger airplanes, most of the Asian airports lack basic aviation infrastructure. To create a functional single market in
Asia, it is necessary to overcome the missing links in transportation, the lack of interoperability, and infrastructure gaps
reducing the efficiency and weakening the global competitiveness of the Asian industry.
India-ASEAN free trade agreement (FTA) is central to India’s growing engagement with her eastern neighbours.
Accompanying this growth will be an increase in the demand of national and international infrastructure, for both
production and consumption, and for international trade purposes. Undoubtedly, failure to respond to this demand
will slow down India’s trade and hamper the growth process. Therefore, infrastructure challenges require a better
understanding and adequate support.

4.7 INFRASTRUCTURE FUNDING FOR ENHANCED CONNECTIVITY

Funding requirement for infrastructure is huge and a considerable amount of future investment is expected to come
from the private sector. So far, response from the private sector has been good. However, efforts to enable level playing
field to the private entrepreneur by fair allocation of risks is highly essential. In this regard, greater economic and/or
commercial cooperation is desired from those developed and developing countries that have technological expertise
on transport and communications.
In order to fund the large infrastructure investments required to boost ASEAN-India connectivity, the region needs to
further develop mechanisms for the financial intermediation between its large savings and its equally large investment
needs.The region should support expanding the use of Public Private Partnerships (PPPs) for investment in infrastructure
and creation of a large regional infrastructure development fund to channel its foreign exchange reserves into much
needed infrastructure investments.

4.8 BOON FOR NORTHEAST AND CHENNAI

Enhancing connectivity between India and ASEAN is a multifaceted task and requires implementing strong policy
initiatives. Development of this connectivity would open significant opportunities for industrial development in India and
its trade potential with South and East Asian countries. Chennai has already established itself as a gateway to southern
India. This connectivity would link the Chennai region to the rest of the world through its maritime infrastructure. Thus,

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Chennai has a great potential of becoming the greater gateway for India and function as a core node providing centre
of business activities with industrial clusters and work as an engine to promote regional economic growth.

At the same time, with greater connectivity, NER will be better integrated with the markets of neighbouring countries.
Cross-border trade and investment flow and cross-border development cooperation will open up new avenues for
growth and development. Private investment will be encouraged to cash in on the cross-border synergies. ASEAN-India
connectivity will be beneficial for the people living across the borders in both the countries.

A two-pronged strategy of development may help the NER to overcome the drawbacks of landlockedness. First,
because NER shares 96% of its borders with the neighbouring countries of Bhutan, Bangladesh, China, and Myanmar,
it is important to link the region with the Southeast Asian as well as South Asian markets. Second, restoration of
NER’s traditional routes by way of transit and transhipment corridors through Bangladesh for movement of goods and
passengers can address the adverse geographical condition and ensure speedy development of NER. However, for
both the options, the obstacles to physical connectivity as well as non-physical institutional arrangements between
the region and the ASEAN countries on the one hand and between the region and Bangladesh on the other need to be
addressed expeditiously.

4.9 WAY FORWARD

Once the cross-border connectivity improves, cross-border trade and development cooperation would be promoted.
Border trade may be viewed as a strategic tool for the long-term development of the frontier areas. An improved
infrastructure between India and ASEAN will be insufficient to foster the regional integration until and unless it is
widely complemented by appropriate policies and regulations as well as participation of the private sector. We need
policies and regulations to foster an effective cross-border movement of goods, services, and people. Harmonising and
simplifying the customs procedures, information sharing, customs modernisation, establishing transparent transit rules,
and improving logistics in general are also critical to infrastructure expansion.

Enhancing connectivity requires stronger regional institutions to build and manage the cross-border infrastructure.
Trade liberalisation is important but sometimes is not adequate to enhance a country’s trade. Improved connectivity
and trade facilitation can complement that effort. It is the way forward for the regional trade and economic partnership
between India and ASEAN. The desired outcomes emanating from this report would be to facilitate the deepening and
widening of the production and distribution networks between India and ASEAN. Equally important, enhanced ASEAN-
India connectivity will narrow the development gaps and lead to increased opportunities for greater investment, trade,
growth, and employment. Finally, deeper intraregional economic linkages and people-to-people interactions between
ASEAN and India will eventually contribute towards the achievement of an integrated Asian community.



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CHAPTER 5

Role of engineering MSMEs in strengthening
India-ASEAN regional production network

5.1 INTRODUCTION

It is now a well-recognised fact across the globe that micro small and medium enterprises (MSMEs) play a vital role
in the development process of an economy, especially in the developing and emerging economies. Despite several
shortcomings, a well-built and resilient MSME sector is critical to sustainable economic growth of a country. Both
manufacturing and services sectors in an emerging nation rely much on the performances of their MSMEs in order to
achieve a significant contribution in economic development of the nation. In this chapter, we will discuss the contribution
of the MSME sector in the economic development of India as well as in the ASEAN nations and will analyse the
opportunities left for the MSMEs in the engineering sectors of both sides with strengthening bilateral economic relations
between India and ASEAN.

Chapter 5

5.2 MSME SECTOR AS BACKBONE OF INDIAN ECONOMY

The importance of the MSME sector in the process of development of the Indian economy has been increasing so
rapidly that the sector is now called the backbone of the Indian economy. The contribution of the MSME sector to India’s
GDP has increased from 29.3% in 2014-15 to 30.27% in 2018-19. The contribution of manufacturing MSMEs in the
country’s total manufacturing GVO (gross value of output) at current prices has remained constant at around 33%, i.e.
one-third during the period 2014-15 to 2018-19, while the contribution of manufacturing GDP is accounted at around
8% of GDP. After agriculture, MSME is the second-largest employment generating sector in India with creation of 11.1
crore jobs across India where 32% have been created in manufacturing. The contribution of MSMEs in Indian exports
is around 40% at present.

5.2.1 Definition

In India, a firm where investment in plant and machinery or equipment does not exceed Rs1 crore and turnover does not
exceed Rs5 crore is called a micro enterprise while in case of a small enterprise, the investment in plant and machinery
or equipment should be Rs10 crore or less and turnover Rs50 crore or less. For a medium enterprise, the investment
in plant and machinery or equipment should not exceed Rs50 crore and turnover should not exceed Rs250 crore.

5.2.2 MSME in Indian engineering segment

India’s engineering sector has seen remarkable performance in recent years before being impacted by the pandemic.
Indian engineering exports achieved its record high three times between 2014-15 and 2018-19 with an all-time-high
record of $81 billion in 2018-19. As mentioned earlier, the MSME sector contributes around 40% to India’s overseas
shipments, and it can easily be concluded that a vibrant MSME sector has led the growth of engineering.

In India, engineering accounts for nearly 30% of manufacturing production and contributes to around one-fourth in
India’s merchandise exports. The importance of the MSME lies in the procedure of setting production linkage with the
large-scale firms especially in the manufacturing sector, including engineering. In the case of exports also, MSMEs are
the integral part of the supply chain. Considering the contribution of MSMEs to manufacturing, exports, and employment,
other sectors are also benefitting from it. MNCs are buying semi-finished and auxiliary products from small enterprises
in almost all segments across engineering, which is helpful in creating a linkage between MSME and big companies.
That’s why this sector is called the growth-engine of the economy.

Recognising the indispensability of the MSME sector in economic advancement, the Government of India has been
continuously trying to improve this sector so that it can response its best to the nation’s need. Unique initiatives of the
government like Make in India, Digital India, etc have opened the doors for the Indian MSME sector to participate more
in the production process and get integrated in the global value chain.

5.2.3 Pivotal role of MSME sector in ASEAN economic development

Like India, the economy of ASEAN is also greatly supported by the MSME sector in stimulating domestic demand,
creating employment, promoting innovation, and building healthy competition to fuel the pace of economic activities. As
per the information published in Asia-SME-Monitor 2020 based on National Firm Classification, MSMEs in Southeast

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Asia accounted for an average 97.2% of all enterprises, 69.4% of the total workforce, and 41.1% of a country’s GDP
during 2010-19. MSMEs contributed 20.4% of a country’s export value on average during 2010-18.

Development of the MSME sector has been a policy priority for governments across all ASEAN nations as they seek
economic diversification and inclusive growth. Most countries in this region have long-term strategies for development
of MSMEs in line with their broader national economic development strategies and goals. In this context, it is mention-
worthy that all the 10 ASEAN -nations together formed the ASEAN Economic Community (AEC) in 2015 to accelerate
regional economic integration. The AEC holds the ASEAN Coordinating Committee on Micro, Small and Medium
Enterprises and the Working Committee on Financial Inclusion to promote MSME development and financial inclusion
in the region, respectively. ASEAN’s long-term MSME development strategy for 2016-25 has five major objectives:

• promoting productivity, technology, and innovation;

• increasing access to finance;

• enhancing market access and internationalisation;

• consolidating the policy and regulatory environment; and

• promoting entrepreneurship and human capital development.

5.2.4 Opportunities for engineering MSMEs of India and ASEAN

Our discussion so far has pointed out two important aspects of MSMEs in India and ASEAN. The MSME sector in both
the regions have noteworthy contribution in the process of economic development of their respective regions and
engineering MSMEs of both regions are well equipped to take advantage of the India-ASEAN integration process,
especially in the engineering sector, by forming regional production networks and by participating more in regional
value chain.

5.2.5 Integrating engineering MSMEs of India and ASEAN

India has a suitable policy regime in place for its MSME sector while the incumbent government has brought several
unique initiatives like Make in India that encourage more participation of MSMEs. Some 25 segments of manufacturing
have been selected for this first-of-its-kind initiative ensuring vast scope for the MSMEs to engage in the production
process. On one hand, the scheme invites leading global players to set up their production units in India, and on the
other, it extends the scope for Indian MSMEs to get integrated with their ASEAN counterparts.

Now, the ASEAN region is one of the highest contributors in the global value chain (GVC). However, the advent of
the Covid pandemic has underlined the limitations of GVC by causing disruption in global supply chains across the
globe. The importance of the regional value chain (RVC) has become prominent before the policymakers as well as for
businesses. For India, being connected with the ASEAN region through its strategically important CLMV sub-region and
with ASEAN countries offering an important market for Indian products, it is a very good opportunity to complement
its Make in India campaign. The opportunities for developing regional production networks and building RVCs through
integration of MSMEs of India and the ASEAN extends to almost all segments of engineering with special mention to
parts and components that will be discussed later in this chapter.