BILATERAL TRADE RELATIONS

OFINDIA

BILATERAL TRADE RELATION

INDIA – AUSTRALIA

BILATERAL TRADE

The exchange of goods between two countries. Bilateral trade agreements give preference to certain countries in

commercial relationships, facilitating trade and investment

between the home country and the foreign country by reducing or eliminating

tariffs, import quotas, export restraints and other trade barriers.

INDIA’S TRADE AND COMMERCIAL RELATIONS

Exports during October, 2014 were valued at US $ 26094.07 million (Rs.160066.25 crore) which was 5.04 per cent lower in Dollar terms (5.47 per cent lower in Rupee terms) than the level of US $ 27480.13 million (Rs. 169320.47 crore) during October, 2013. Cumulative value of exports for the period April-October 2014-15 was US $ 189795.47 million (Rs 1145605.36 crore) as against US $ 181234.98 million (Rs 1080203.41 crore) registering a growth of 4.72 per cent in Dollar terms and growth of 6.05 per cent in Rupee terms over the same period last year.

Imports during October, 2014 were valued at US $ 39451.53 million (Rs.242003.58 crore) representing a growth of 3.62 per cent in Dollar terms and a growth of 3.16 per cent in Rupee terms over the level of imports valued at US $ 38075.02 million (Rs. 234601.50 crore) in October, 2013. Cumulative value of imports for the period April-October 2014-15 was US $ 273551.51 million (Rs 1651470.41 crore) as against US $ 268554.34 million (Rs 1590363.03 crore) registering a growth of 1.86 per cent in Dollar terms and growth of 3.84 per cent in Rupee terms over the same period last year.

The economic relationship between Australia and India has developed rapidly in recent years, particularly under the impetus of India’s far-reaching process of economic reform and the resulting rapid globalisation of the Indian economy. In recognition of the growing synergies between the two economies, and the commitment on both sides to further enhance the economic partnership, Australia and India agreed in August 2007 to undertake a feasibility study for a possible bilateral FTA(Free Trade Agreement).This would help inform a subsequent decision by the two Governments about whether to proceed to FTA negotiations.

Broad Macroeconomic and Trade Indicators: Australia and India

Australia India GDP, average annual growth, 2004-2009, per cent GDP, current prices, US$ billion (2009) GDP per capita, current prices, US$ (2009) 45,157 1,033 Structure of output, per cent (2009)Agriculture Industry 26.6 28.3 of which manufacturing ServicesPopulation, million (2009)Rural population as per cent of total (2007)Life expectancy at birth, years (2007)Educational enrolment, tertiary, per centExports, US$ billion (2009) Goods and services 198 198 GoodsServicesImports, US$ billion (2009) Goods and serviceGoodsServices

2.9996

45,157

2.926.6

9.162.7

22118173

198155

42204161

43

8.41,2431,033

14.928.315.9

56.8 1,203

716512

19816335

326 273

54

Sources: Australia Bureau of Statistics, IMF World Economic Outlook, World Bank World Tables on dX Data, Economist Intelligence Unit, DFAT STARS, CEIC database

AUSTRALIAN ECONOMY

Australia has a highly open, market-based and capital-intensive economy which is currently enjoying a prolonged economic expansion, presently in its 18th year. It grew by an average of 3.5 per cent from the early 1990s to 2009, but the global financial crisis has had an impacted on rates of economic growth in Australia from late 2008 to 2009

INDIAN ECONOMY

The Indian economy has remained on the high growth path of recent years, despite some moderation in recent growth projections. After independence, India followed the system of a command and control economy to implement the development policies outlined in the Five Year Plans. The principal objectives were to increase aggregate consumption, reduce unemployment, work towards self-reliance and self-sufficiency, and reduce social disparities. The priority among these objectives changed from plan to plan.

GDP growth in Australia and India

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India Australia

India was Australia’s 4th largest export destination for its goods and 5th largest trading partner in goods and services

in 2010-11

Australia was India’s eighth biggest trading partner in the year 2010-11. Bilateral trade in goods : A$ 17.82 bn. (US$17.66 bn.) (2010-11)* India's Exports : A$ 2.08 bn. (US$2.05 bn.) (2010-11)* India's Imports : A$ 15.74 bn. (US$ 15.58 bn.) (2010-11)* Main exports : Pearls & gems, Rotating electric plants, Jewellery Made-up

textiles, and Medicaments (incl. veterinary). Main imports : Coal, non-monetary gold, copper and copper ores, Crude

Petroleum, Fertilizers (excl. crudes) etc. Bilateral trade in services : A$ 3.19 bn. (US$ 3.15 bn.) (2010-11) India's Service Exports : A$0.69 bn. (US$ 0.68 bn.) (2010-11) India's Service Imports : A$ 2.5 bn. (US$ 2.47 bn.) (2010-11) Australia's main export destinations : Japan, China, India, U.S.A. Australia's main import sources : China, USA, Japan, Singapore, Germany.

Australia’s exports to India India is one of the fastest

growing of all Australia’s major markets for both goods and services, with exports growing at an annual average rate of 25 per cent during the five years to 2008-09. In 2008-09, India was Australia’s fourth-largest goods export market and its fifth-largest services export market. Australia is an increasingly important source of goods imports for India, with its share increasing from 2.4 per cent of total imports in 2001 to 3.5 per cent in 2008.

Commodity exports dominate, consistent with the traditional pattern of trade. Coal, gold, and copper were Australia’s three principal exports, with fertilisers, manganese, wool, aluminium, vegetables and lead also significant.

As with merchandise exports, services exports to India have grown rapidly, from US$306 million in 2002-03 to US$2.5 billion in 2008-09.

Trade between Australia and India has grown strongly over recent decades, with a particularly sharp upswing since 2002. Two-way trade between Australia and India in 2008-09 reached US$16 billion, of which goods trade was the largest component, at US$12.9 billion. Two-way services trade has risen markedly off a low base and amounted to US$3.1 billion in 2008-09.

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Australia’s trade with India in goods and services

EXPORTIMPORT

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Australia is an increasingly important destination for Indian

exports. In 2008, India’s goods exports to Australia reached US$1.45 billion, while its services exports to Australia were almost US$529 million.

Australia is India’s 14th-largest trading partner in terms of India’s total merchandise trade (2008). Australia ranked 34th as a destination of India’s total goods exports, which amounted to US$1.45 billion (A$1.7 billion) in 2008.

India exports a range of services to Australia, including ITeS, software and BPO – see Table 3.4. India’s exports to Australia have grown over the last decade. The balance of services trade is in Australia’s favour. The major Indian exports to Australia, by sector, are: travel services, IT and IT enabled services and other business services. The growth in travel services indicates increasing interest in India towards Australia as a tourist destination, as well as travel from India to visit Indian origin residents in Australia or students from India studying in Australia.

Australia is an increasingly important destination for Indian exports. In 2008, India’s goods exports to Australia reached US$1.45 billion, while its services exports to

Australia were almost US$529 million.

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India’s Export to Australia

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CONCLUSION

The total amount of trade (in goods and services) between Australia and India has been rising rapidly in recent years, reaching almost A$19 billion (about US$ 16 billion) in 2008. Bearing in mind the two countries’ economic size, there is further potential for growth in bilateral trade flows owing to the complementarities of the two economies.

BILATERAL TRADE RELATION

INDIA – SOUTH KOREA

OVERVIEW The trade and economic relations between India and Republic of

Korea (Korea) have gathered momentum in recent years with bilateral trade reaching a substantial figure of $ 17.57 billion in 2013. India is the 15th largest trade partner of Korea. Bilateral Comprehensive Economic Cooperation Agreement (CEPA) has spurred the process. Investments both ways are on the upswing. Korean majors such as Hyundai Motors, Samsung Electronics, LG, etc., which have invested around $ 2.93 billion till September 2013 in India, have plans to expand further. Actual Indian FDI led by Mahindra & Mahindra (Ssangyong Motors), Aditya Birla Group (Novelis Ltd.) & TATA (Tata Daewoo commercial vehicles) also is inching close to $ 3 billion.

India- South Korea Trade Korea is well-integrated with the global economy with a

trade/GDP ratio of more than 85 per cent in 2006. The Korean economy has followed an export-led growth strategy with exports contributing 43 per cent of GDP in 2006. Comparatively, India is far less integrated, despite the increasing openness of the economy since 1991, with a trade/GDP ratio of around 45 per cent in 2006. Korea also has a higher share in total world merchandise trade as compared to India. Korea is also a major importer of services while India has emerged since 2001 as a significant exporter of services. In 2007, India ranked 26th and 18th and South Korea ranked 11th and 13th among merchandise exporters and importers respectively in the world.

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India-Korea Trade Relation (US$ Million)

Exports Imports Trade Balance

Merchandise Trade The increasing liberalization of the Indian economy has

significantly increased trade and investment flows between the two countries. Indian economic reforms were considered timely by Korean companies that were looking for alternative destinations for trade and investments. During 1991 to 2007, the value of Indian exports to Korea increased from a mere $0.24 billion to $2.46 billion while Indian imports from Korea increased from $0.314 billion to $5.4 billion during the same period (UNCOMTRADE, 2008). At present, India ranks 11th among export destinations and 16th among sources of imports for the Korean economy. The share of both countries in their respective exports and imports has increased over the years.

Korea's main exports to India are automobile parts, telecommunication equipment, hot rolled iron products, and petroleum refined products, base lubricating oils, nuclear reactors, mechanical appliances, electrical machinery & parts and iron & steel products. By product, exports of mobile communication devices, such as smartphones, jumped 21.2 percent from a year earlier in 2013 with shipments of home appliances and semiconductors surging 16.8 percent and 13.3 percent on-year, respectively. Shipments of petroleum products and ships dropped 5.9 percent and 6.3 percent on-year, respectively, with exports of steel products plunging 11.9 percent.

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Korea's Importance in India's External Trade

Share in India's Import Share in India's Export

Services Trade In 2007, India’s share in world exports and imports of commercial services

was 2.7 per cent and 2.5 per cent respectively as compared to Korea’s shares of 1.9 per cent and 2.7 per cent.18 Moreover, India has the highest share of commercial services in total exports (both goods and services) – even more than high-income countries. In 2006, the share of commercial services in total exports from India was around 36 per cent whereas it was 13 per cent for Korea.

Major items of India's export to Korea are mineral fuels / oil distillates (mainly naphtha), cereals, iron and steel. Basic materials comprise the bulk of our exports, around 74% of total exports. Exports from India dropped by -10.7% amounting to 6,183 million dollars in 2013. However, a few items had shown a rise: Naphtha has emerged as the most important single item of India’s export to Korea. Its share had increased from 26% in 2002 to 42.3% in 2013. In 2013,exports of residues and waste from food industries, prepared animal fodder has registered 37.4% increase followed by Aluminum &Articles with increase of 31.3% and ores, slag, ash 17.8% respectively.

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Importance of India in Korea's Trade

Share of India in Total export Share of India in Total import

Conclusion

• Although India has steadily opened up its economy, its tariffs continue to be high when compared with other countries, and its investment norms are still restrictive. This leads some to see India as a ‘rapid globalizer’ while others still see it as a ‘highly protectionist’ economy.

• India is now aggressively pushing for a more liberal global trade regime, especially in services. It has assumed a leadership role among developing nations in global trade negotiations, and played a critical part in the Doha negotiations.

Bibliography

Govt. of India Ministry of Commerce & Industry, Dept. Of

Commerce Australian Govt. Dept. of Foreign Affairs and

Trade High Commission of india The World Bank

National Portal of India ICRIER (Indian Council For Research On

International Economic Relations) Potugese Institute of International Relations

& Security (IPRIS) Embassy of India- South Korea