Despite FTA, Indo-Thai economic ties need a boost

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: The year 2008 celebrates the sixtieth anniversary of Indo-Thai relations. The contemporary Indo-Thai economic relations are intertwined in a growing exchange of trade, investment, technology and human resources. In conventional terms, India and Thailand are not adjacent, but are sharing a maritime border. Contrary to popular belief, India’s Andaman and Nicobar Islands are much closer to Thailand’s coast than to the Indian mainland. So to say, India’s Port Blair and Thailand’s Phuket are the twin cities, an agreement for which was signed on June 29, 2005. Going with the tide, both of them occupy central place in each other’s extended neighbourhood. Thailand’s “Look West Policy” and India’s “Look East Policy” have been supplementing each other in enlarging market size and business opportunities.

How the economic relations have been then growing between the two countries? Let’s look at trade and investment aspects. Bilateral trade between the two countries has grown from less than $300 million in 1991 to over $4 billion in 2007. India was having a favourable balance of payment with Thailand till 2004. The scenario changed from 2005 onwards. India’s imports from Thailand almost doubled in 2006, amounting to $2.04 billion, compared to 2005. Another noticeable change is India’s exports to Thailand, which have grown much faster than India’s exports to the world in last three years. Given the trade potentials that the countries are having, the present bilateral trade profile is nonetheless very unsatisfactory.

India’s trade with Thailand is relatively diversified, and carried mostly intermediate and industrial products feeding domestic production. India’s exports to Thailand which have grown over time are chemical, medicinal and pharmaceutical products, iron and steel products, machinery and parts, yarn and fibres, vehicle parts and accessories, whereas, India’s imports from Thailand are sourced for industries in sectors like electronics and electrical, polymers, automobile, telecom and office equipment and home appliances, among others. The present trade pattern between the two countries shows some sort of complementarities and provides opportunities for trade creation, provided barriers are eliminated.