INTERNATIONAL SCHOOL OF

BUSINESS & MEDIA

TOP 10 TRADE PARTNERS

OF INDIA & ITS IMPACT
ON BoP

SUBMITTED TO: SUBMITTED BY:

PROF. PRANJALI UNKULE PRIYAM PRAKASH
(20191077)
RIYA SINGH (20191124)
AFRIN SATANI (20191004)
AKSHAT SHARMA (20191006)
MAYANK SAGAR (20191057)
(CORE 5)

CONTENTS
 INTRODUCTION
……………………………………………………………………3
TRADE STATISTICS………….
………………………………………………….4
BALANCE OF
PAYMENT………………………………………………………5
TOP 10 TRADE PARTNERS OF
INDIA……………………………….6

USA…………………………………………………………………
………………7

CHINA……………………………………………………………
……………..11

UAE……………………………………………………………........
............15
SWITZERLAND……………..
…………………………………………….17
GERMANY………………………….
……………………......................23
HONG KONG……………………….
……………………………………….28

INDONESIA………………………………………………………
………….32
SOUTH KOREA…………………….
………………………………………34
 MALAYSIA………………………………………………………
…………..40
SINGAPORE………………………….
………………………………………42
Factors negatively affecting bop…………………...…..45
India’s exports & imports……………………………….
…………49
Qualitative
analysis…………………………………………………..50

INTRODUCTION: INDIAN TRADE

Trade in India includes all imports and exports to and from India. At the
level of Central Government it is administered by the Ministry of
Commerce and Industry. Till the early 1990s, India was a closed economy:
average tariffs exceeded 200 percent, quantitative restrictions on imports
were extensive, and there were stringent restrictions on foreign investment.
Now India is a newly industrialized country, one of the fastest growing
major economies. India was the eighth largest exporter of commercial
services in the world in 2017, accounting for 3.4% of global trade in
services. India recorded a 5.7% growth in services trade in 2017–18. India
exports approximately 7500 commodities to about 190 countries, and
imports around 6000 commodities from 140 countries. India exported
US$318.2 billion and imported $462.9 billion worth of commodities in
2016.
The Government of India's Economic Survey 2017–18 noted that five states
— Maharashtra, Gujarat, Karnataka, Tamil Nadu and Telangana —
accounted for 70% of India's total exports. It was the first time that the
survey included international export data for states. The survey found a high
correlation between a state's Gross State Domestic Product (GSDP) per
capita and its share of total exports. With a high GSDP per capita but low
export share, Kerala was the only major outlier because the state's GSDP
per capita was heavily influenced by remittances.
The survey also found that the largest firms in India contributed to a smaller
percentage of exports when compared to countries like Brazil, Germany,
Mexico, and the United States. The top 1% of India's companies accounted
for 38% of total exports.

TRADE STATISTICS
Summary table of recent India Foreign Trade (in billion $):

Year Export Import Trade Deficit

1999 36.3 50.2 -13.9

2000 43.1 60.8 -17.7

2001 42.5 54.5 -12.0

2002 44.5 53.8 -9.3

2003 48.3 61.6 -13.3

2004 57.24 74.15 -16.91

2005 69.18 89.33 -20.15

2006 76.23 113.1 -36.87

 2007 112.0 100.9 11.1

2008 176.4 305.5 -129.1

2009 168.2 274.3 -106.1

2010 201.1 327.0 -125.9

2011 299.4 461.4 -162.0

2012 298.4 500.4 -202.0

2013 313.2 467.5 -154.3

2014 318.2 462.9 -144.7

2015 310.3 447.9 -137.6

2016 262.3 381 -118.7

2017 275.8 384.3 -108.5

2018 303.52 465.58 -162.05

2019 330.07 514.07 -184

BALANCE OF PAYMEMTS

The balance of payments (BOP) is the method countries use to monitor all
international monetary transactions at a specific period of time. Usually, the BOP is
 calculated every quarter and every calendar year. All trades conducted by both the
private and public sectors are accounted for in the BOP in order to determine how
much money is going in and out of a country. If a country exports goods and services
more than the imports of goods and services from other countries then we called
country has surplus balance. In the same way if a country imports goods and services
during a period more than the exports made by that country then we called that country
has deficit balance.

INDIA’S TOP 10 TRADE PARTNERS

 1. UNITED STATES
The US remains India’s top trading partner in terms of trade, followed by China.
Goods dominate the bilateral trade between US and India- approximately 62% while it
is 38% in services.
U.S. goods and services trade with India totalled an estimated $142.6 billion in 2018.
Exports were $52.7 billion; imports were $83.9 billion. The U.S. goods and services
trade deficit with India was $25.2 billion in 2018.
The US is on rank 1 on list of India’s Trading Partners with $87.9 billion in total (two
way) goods trade during 2018. Goods exports totalled $52.4 billion; goods imports
totalled $35.5 billion. The U.S. – India trade balance was $16.9 billion in 2018.

Trade in services with India (exports and imports) totalled an estimated $54.8 billion
in 2018. Services exports were $25.2 billion; services imports were $29.6 billion. The
U.S. services trade deficit with India was $4.4 billion in 2018.

According to the US-India Strategic and Partnership Forum (USISPF) report, the
overall growth rate in cumulative bilateral trade for the first three quarters of
2019(January-September) was down to 4.5% from 8.4% registered for the first two
quarters. In the third quarter, goods and services trade fell to -2.3% as against an
impressive growth of 9.6% witnessed for the first two quarters of the year.

The report projected that total bilateral trade may touch $238 billion by 2025 if the
current 7.5% average annual rate of growth sustains. However, higher growth rates can
result in bilateral trade in range of $283 billion and $327 billion.
Exports

 India was the United States' 12th largest goods export market in 2018.
 
 U.S. goods exports to India in 2018 were $33.5 billion, up 30.6% ($7.9 billion)
from 2017 and up 89.5% from 2008. U.S. exports to India account for 2.0% of
overall U.S. exports in 2018.
 
 The top export categories (2-digit HS) in 2018 were: precious metal and stone
(diamonds) ($7.9 billion), mineral fuels ($6.7 billion), aircraft ($2.9 billion),
machinery ($2.2 billion), and organic chemicals ($1.6 billion).
 
 U.S. total exports of agricultural products to India totalled $1.5 billion in 2018.
Leading domestic export categories include: tree nuts ($663 million), cotton
($333 million), fresh fruit ($163 million), dairy products ($48 million), and
prepared food ($33 million).
 
 U.S. exports of services to India were an estimated $25.2 billion in 2018, 6.6%
($1.6 billion) more than 2017, and 151% greater than 2008 levels. Leading
services exports from the U.S. to India were in the travel, intellectual property
(computer software, audio and visual related products), and transport sectors.
Imports

 India was the United States' 10th largest supplier of goods imports in 2018.
 
 U.S. goods imports from India totalled $54.3 billion in 2018, up 11.9% ($5.8
billion) from 2017, and up 111.4% from 2008. U.S. imports from India account
for 2.1% of overall U.S. imports in 2018.
 
 The top import categories (2-digit HS) in 2018 were: precious metal and stone
(diamonds) ($11 billion), pharmaceuticals ($6.3 billion), machinery ($3.3
billion), mineral fuels ($3.2 billion), and vehicles ($2.8 billion).
 
 U.S. total imports of agricultural products from India totaled $2.7 billion in
2018. Leading categories include: spices ($261 million), rice ($216 million),
essential oils ($193 million), processed fruit & vegetables ($141 million), and
other vegetable oils ($127 million).
 
 U.S. imports of services from India were an estimated $29.6 billion in 2018,
4.9% ($1.4 billion) more than 2017, and 134% greater than 2008 levels. Leading
services imports from India to the U.S. were in the telecommunications,
computer, and information services, research and development, and travel
sectors.

Trade Balance

 The U.S. goods trade deficit with India was $20.8 billion in 2018, a 9.0%
decrease ($2.1 billion) over 2017.
 
 The United States has a services trade deficit of an estimated $4.4 billion with
India in 2018, down 3.7% from 2017.

Investment

 U.S. foreign direct investment (FDI) in India (stock) was $46.0 billion in 2018, a
3.4% increase from 2017. U.S. direct investment in India is led by professional,
scientific, and technical services, manufacturing, and finance and insurance.
 
 India's FDI in the United States (stock) was $9.6 billion in 2018, down 2.0%
from 2017. India's direct investment in the U.S. is led by professional, scientific,
and technical services, manufacturing, and depository institutions.
 
 Sales of services in India by majority U.S.-owned affiliates were $27.0 billion in
2016 (latest data available), while sales of services in the United States by
majority India-owned firms were $17.0 billion.
U.S. Goods and Services Trade with India (in billions of dollars)

199 201 201 201 201 201 201

2000 2008
5 3 4 5 6 7 8
114. 126.
TOTAL 11.2 19.1 66.1 97.3 104.6 109.4 142.6
4 0

EXPORT
4.6 6.5 27.7 35.1 36.8 40.0 42.2 49.3 58.7
S

IMPORT
6.6 12.6 38.4 62.2 67.8 69.4 72.2 76.8 83.9
S

BALANC
-2.0 -6.1 -10.6 -27.1 -31.0 -29.4 -30.0 -27.5 -25.2
E
 2. CHINA
China–India relations, also called Sino-Indo relations or Indian-Chinese relations,
refers to the bilateral relationship between the People's Republic of China (PRC) and
the Republic of India. Although the relationship has been cordial, there have been
border disputes. The modern relationship began in 1950 when India was among the
first countries to end formal ties with the Republic of China (Taiwan) and recognize
the PRC as the legitimate government of Mainland China. China and India are the
two most populous countries and fastest growing major economies in the world.
Growth in diplomatic and economic influence has increased the significance of their
bilateral relationship.

The relationship between the two giants of Asia, and the world, has been progressing
at a tremendous pace. Both nations have witnessed their share of ups-and-downs over
the years. India and China today represents Asia’s two largest and most dynamic
economies which are emerging as new trend setters in international relations. The
history of bilateral relations between India and China dates back to mid-1980s.

China ranked 2nd on the list of India’s Trading Partners with $87.0 billion in total (two
way) goods trade during 2018. Goods exports totalled $16.7 billion; goods imports
totalled $70.3 billion. The U.S. – India trade balance was $-53.6 billion in 2018.

Bilateral Trade: Dynamics and Direction

The bilateral trade between India and China has grown four-fold in the past decade.
But the trade was tilted more in favour of China. India had unfavorable balance of
trade with China. While China continues to enjoy a huge favourable balance of trade
vis-à-vis most other smaller states of the South Asian region, it is only the India-china
trade that has remained to be China’s most balanced trade in South Asia. However,
both these nations are growing very fast and can propel the future world economy with
a pool of the world’s largest skilled work force.
Chinese imports from India amounted to $16.7 billion or 0.8% of its overall imports,
and 4.2% of India's overall exports in 2018. The 10 major commodities exported from
India to the China were:

1. Cotton: $3.2 billion

2. Gems, precious metals, coins: $2.5 billion
3. Copper: $2.3 billion
4. Ores, slag, ash: $1.3 billion
5. Organic chemicals: $1.1 billion
6. Salt, sulphur, stone, cement: $958.7 million
7. Machines, engines, pumps: $639.7lmillion
8. Plastics: $499.7 million
9. Electronic equipment: $440 million
10.Raw hides excluding fur skins: $432.7 million

Chinese exports to India amounted to $70.3 billion or 2.3% of its overall exports, and
12.6% of India's overall imports in 2018. The 10 major commodities exported from
China to India were:

1. Electronic equipment: $16 billion

2. Machines, engines, pumps: $9.8 billion
3. Organic chemicals: $6.3 billion
4. Fertilizers: $2.7 billion
5. Iron and steel: $2.3 billion
6. Plastics: $1.7 billion
7. Iron or steel products: $1.4 billion
8. Gems, precious metals, coins: $1.3 billion
9. Ships, boats: $1.3 billion
10.Medical, technical equipment: $1.2 billion

During the first decade of 21st century, the presence of Chinese products in Indian
market has grown profoundly and exponentially. During 2001-2016, India’s imports
from China jumped to a whopping 33 times, from USD 1.83 billion to USD 60.48
billion. Astoundingly, India’s trade deficit with China expanded 57 times during the
same period. India's trade deficit with China narrowed 2 the lists of products are
annexed with the research paper in the end. 17 marginally to USD 51.57 billion in
2016-17 from USD 52.69 billion in 2015-16. However, the magnitude of trade deficit
is exorbitant. In 2016, India was the 7th largest export destination for Chinese
products, and the 27th largest exporter to China. India - China trade in the first four
months of 2017 increased by 19.92% year-onyear to USD 26.02 billion. India’s
exports to China increased by 45.29% year-on-year to USD 5.57 billion while India’s
imports from China saw a year-on-year growth of 14.48% to USD 20.45 billion. The
Indian trade deficit with China has further increased by 6.07% year-on-year to USD
14.883 billion during the same period. With industrialization gaining pace, India’s
import pattern with China has shifted dramatically from intermediate goods to capital
goods. India’s import share of capital goods from China jumped from 47% in 2011 to
57% in 2018 whereas share of intermediate goods fell from 37% to 29% during the
same period. China has been able to enhance its footprint in India to a greater extent.
The intensity of Chinese products in Indian market has been continuously rising since
2009. Conversely, Indian products have a weak intensity in China’s market and have
been consistently falling over the years. On the diversification front, China’s basket of
exports to India is highly concentrated and intensive towards fewer selected products.
This enhances the situation of high volatility due to higher reliance on fewer products.
Total FDI inflows from China to India between April 2000 and September 2019 stood
at USD 1.738 billion wherein China’s share was roughly 0.49% which rightfully
indicates that China is not a significant and substantial investor in India as compared to
Singapore, Mauritius and Switzerland. Conversely, in recent years, China has invested
heavily in billions of dollars in various countries. Unlike trade, levels of investment
between China and India remain relatively low. Though an estimated 100 companies
from each country have offices in the other, cumulative bilateral FDI is less than USD
500 million. Cross-border investment remains low because Chinese and Indian
companies are still in the early stages of learning how to operate and succeed in each
other’s economies. Due to cheap labour and economies of scale, china offers low-
priced imports such as textiles and clothing, electronic devices, machinery, etc.
Further, exploiting the huge Indian market to dump their products and indirectly
killing Indian units. Chinese products are affecting our manufacturing units and many
of them have had to shut their shops. There are so many Chinese toys in the market
that Indian toy industry is finding very hard to survive. In the last 5 years, many of the
Indian toy companies have been shut down.

India – China Trade Statistics

2006 2011 2016 2018

India's imports from China

1.83 15.64 55.48 60.48
(USD billion)
CAGR (%) - 53.6% 28.8% 1.7%

Share in India's total imports 3.6% 8.8% 12.0% 17.0%

India's exports to China

0.92 7.83 16.72 8.92
(USD billion)

CAGR (%) - 53.4% 16.4% -11.8%

Share in China's total imports 0.4% 1.0% 1.0% 0.6%

3. United Arab emirates

India–United Arab Emirates relations refers to the bilateral relations that exist between
the Republic of India and the United Arab Emirates. In the financial year 2018-19,
India-UAE bilateral trade grew by over 20% to reach US$59.9 billion. India's exports
to UAE grew by 7% to US$30.13 billion whereas UAE's exports to India surged by
37% to reach US$29.78 billion. UAE and India enjoy historic ties with as many as 2.5
million economic migrant workers of Indian origin residing in the oil-rich gulf state.
Indians also make up the largest ethnic group in the UAE making up roughly 27% of
the total UAE`s residents. These economic migrants over the years have also made a
significant economic contribution to India in the form of remittances worth billions of
dollars. The UAE has expressed its interest to invest in India's agriculture]. Besides,
the UAE, which is India's top trading partner in the entire West Asia North Africa
(WANA) region, as it alone represents 75 per cent of India's export to GCC nations,
has seriously taken forward the relations with India. Leading Indian journalist and an
expert on India's relations with the Middle-East, Ravi S Jha says, Indian exports to the
UAE account for 6 per cent of India's global exports. The relations between the two
countries are expected to flourish with Indian Prime Minister Dr Manmohan Singh's
visit to Abu Dhabi in March, 2013.

In 2008-09, India emerged as the largest trade partner of the UAE with bilateral trade
between the two countries exceeding US$44.5 billion. UAE and India are each other's
main trading partners. The trade totals over $75 billion (AED275.25 billion).

Though India & UAE are two fast growing economies from Asia bilateral trade
between them has not kept pace with the economic growth in the region, with trade
falling to US$49.3 billion in 2016 from about US$67 billion in 2013. So, during the
Indian PM Narendra Modi's visit to the UAE in February 2018, both sides signed a
landmark agreement to conduct trade directly in their local currencies eliminating the
need for US dollars which would significantly boost trade. Both leaders have also set
an ambitious target of US$100 billion in bilateral trade by the year 2020.

In the recent times, The UAE has become India's third largest trading partner after the
US and China as bilateral trade hit $60 billion during financial year 2018-19, said
Navdeep Singh Suri, Ambassador of India to the UAE. The ambassador noted that
trade is growing satisfactorily but called for an increase in bilateral investments.
"Investment side is something that I worry about. Trade has been rising but let us get
the investment moving as well. Now is good time to look at India as it has moved up
65 places in ease of doing business space in the last three years. No country has moved
up that much that fast," Suri said. India is the UAE's second largest trade partner, and
as the region's leading trade enabler, we are keen to maintain these excellent trade ties
and create a relationship that will allow both our countries to prosper.
 4. SWITZERLAND
India and Switzerland have had cordial and friendly relations since India’s
Independence, based on shared values of democracy and the rule of law. India’s policy
of non-alignment and Switzerland’s traditional policy of neutrality led to a close
understanding between the two countries. Switzerland established diplomatic relations
with India soon after Independence. A Treaty of Friendship between India and
Switzerland was signed at New Delhi on August 14, 1948, one of the first such treaties
to be signed by independent India and an important milestone in Indo-Swiss relations.
The Treaty provided for the establishment of diplomatic missions between the two
countries and missions were opened in Berne and Delhi soon after. Switzerland
established its Consulates General in Mumbai and Bangalore. India has a Consulate
General in Geneva. In 2008 India and Switzerland celebrated the 60th anniversary of
the signing of the Friendship Treaty. In recognition of the growth of multi-faceted
bilateral relations over six decades and to outline areas of mutual interest and
cooperation, India and Switzerland decided to establish a Privileged Partnership.
From 1971 to 1976, during and after Bangladesh’s struggle for Independence,
Switzerland represented India’s interests in Pakistan and vice versa. Switzerland
celebrated the centenary of setting up the Mumbai Swiss Consulate on 17 July, 2015,
which had been opened to help Swiss cotton traders and protect business interests. The
celebrations also coincided with 75 years of the Swiss Business Hub in Mumbai. Till
last year the Swiss Consulate in Mumbai issued the maximum number of visas by any
Swiss Consulate before it was transferred to the Swiss Embassy.

VVIP visits

Exchange of high level visits has provided the impetus to strengthen bilateral
cooperation. Hon’ble Prime Minister Shri Narendra Modi paid an official visit
to Geneva, Switzerland on June 5-6, 2016. This was a historic visit, the first
bilateral visit by an Indian Prime Minister to Switzerland in the last several
decades. Hon’ble PM was accompanied by a high powered delegation. Prime
Minister had a packed program which included highly productive bilateral
meetings with the President of the Swiss Confederation H.E. Mr. Johann N.
Schneider-Ammann, a Business Round Table with Switzerland’s top companies,
most of them having significant presence in India, issuing of Press Statements
by both the leaders and a meeting with Indian research scholars based at CERN.

Issues like mutual support for our respective bids for the non-permanent
membership of the UN Security Council, support for India's membership of the
Nuclear Suppliers Group, negotiations with EFTA on TEPA, the need for
cooperation to bring tax offenders to justice, conclusion of an agreement on the
automatic exchange of information on tax matters, cooperation in skill
development and Ayurveda and other bilateral issues were discussed during the
meetings. The President of Switzerland announced his country’s support for
India’s NSG membership, a breakthrough. Following PM’s visit a number of
high-level visits took place in quick succession to follow–up on the impetus
 provided to bilateral relations, especially on the issue of black money, EFTA
and consular issues.

Previous visits

The visit of Swiss President Mr. Flavio Cotti in 1998 was the first ever visit by a
Swiss President to India. The President of the Swiss Confederation, Mr. Pascal
Couchepin, paid a State Visit to India from 6-12 November, 2003. The last high-
level visit to India was that of Swiss President Mrs. Micheline Calmy-Rey from
5-7 November, 2007. After the State Visit of President Dr. A.P.J. Abdul Kalam
in May 2005, Smt. Pratibha Devisingh Patil, President of India visited
Switzerland from September 30 to October 4, 2011.

High level visits

There have been regular bilateral ministerial exchanges. Mrs. Simonetta

Sommaruga, Federal Councillor for Justice and Police, and President of
Switzerland in 2015, led a delegation to India on 5-7 October, 2016 and met
with Home Minister and Minister for Law and Justice and signed 3 major
consular agreements. Ms. Doris Leuthard, Federal Councillor for Environment,
Transport, Energy & Communications, and the next President of Switzerland in
2017, is also expected to visit India.

Mr. Johann N. Schneider-Ammann, Federal Councillor for Economic Affairs,

Education and Research, visited India from 15-17 May, 2015, leading an
economic mission of 25 business representatives, federal and cantonal officials
and Members of Parliament. He held meetings with Hon’ble Finance Minister,
MOS (I/C) for Commerce & Industries and the MOS (I/C) for Skill
Development and Entrepreneurship. He also attended a business meeting
arranged by FICCI and visited Bangalore where he officially launched the CTI
Market entry, an initiative of the Swiss Government’s Mission for Technology
and Innovation (CTI) managed by Swissnex India and aimed at encouraging
Swiss start-ups to enter the Indian market. He had earlier visited India from 7-9
April, 2011 along with a high level business delegation. Swiss Federal
Councillor for Home Alain Berset visited India from October 1-3, 2012 and met
Minister of Health & Family Welfare Shri Ghulam Nabi Azad, Minister of
Culture Kumari Selja and Minister of S&T, Shri Vayalar Ravi to expand scope
of bilateral cooperation in health, culture and S&T. Swiss Federal Councillor for
Environment, Transport, Energy & Communications, Doris Leuthard visited
India from October 18-20, 2012 primarily to represent Switzerland at the UN
Conference on Biological Diversity in Hyderabad.

From the Indian side, there have been several important bilateral ministerial
visits. Hon’ble Minister of State (I/C) for Skill Development and
Entrepreneurship, Shri Rajiv Pratap Rudy visited Switzerland in June 2016 to
address an international congress on vocational and professional education and
training and hold discussions with the Swiss side. Shri Kamal Nath, Minister for
Road Transport & Highways led a 5-member delegation to Switzerland on 11-
12 August, 2009. A 4-member delegation led by Minister of Textiles, Shri
Dayanidhi Maran, visited Switzerland from 25-28 October, 2009. An 18-
member Indian Parliamentary Goodwill delegation led by Minister of
Parliamentary Affairs and Water Resources Shri Pawan Kumar Bansal visited
Switzerland from 1-4 April, 2010. Speaker of Lok Sabha, Smt. Sumitra
Mahajan, led a high-level Parliamentary delegation to the 135th session of the
Inter-Parliamentary Union (IPU) Assembly, held in Geneva from 22-27 October
2016. Smt. Meira Kumar, Speaker, Lok Sabha, led an delegation to Switzerland
from 16-17 July, 2010 to attend the Inter Parliamentary Union (IPU) Sixth
Annual Meeting of Women Speakers of Parliament in Berne. Later, she visited
Berne to participate in the 125th IPU Meeting from 16-19 October, 2011. An
Investment Round Table was held in Geneva on 8 April 2013 during the visit of
Shri Anand Sharma, Minister of Commerce & Industry. Minister of State (IC)
for Sports & Youth Affairs Shri Jitender Singh visited Lausanne from 14-15
May 2013 in connection with the meetings with the International Olympic
 Committee. The Indian delegation led by EAM Shri Salman Khurshid
participated at the Geneva II Conference on Syria held in Montreux on January
22, 2014.

Foreign Secretary and Secretary (West)’s visits

Among official visits, Dr. S. Jaishankar, Foreign Secretary, visited Switzerland

from 10-13 Sept. 2015 for discussions with Swiss State Secretary for Foreign
Affairs, Mr. Yves Rossier on various ways to strengthen bilateral cooperation.
He also held discussions with the State Secretary for Economic Affairs. Ms.
Sujata Mehta, Secretary (West), visited Switzerland for the 9th round of FOCs
on 8 March, 2016 co-chaired by Swiss State Secretary for Foreign Affairs.

Other Secretary level visits

Prof. Ashutosh Sharma, Secretary, Department of Science & Technology,

visited Switzerland on 16-19 Sept, 2015 to participate in the 3rd meeting of the
Indo-Swiss Joint Committee on S&T held on 18 Sept. 2015 in Berne. Secretary
(DST) co-chaired the meeting with State Secretary Mauro Dell’ Ambrogio,
SERI. The meeting reviewed bilateral S&T cooperation and proposed measures
to reinforce it. A delegation from the International Cooperation Division of M/o
Skill Development and Entrepreneurship, visited Switzerland from 31 August to
8 Sept. 2015 for a study trip cum discussions on modalities of cooperation
between the two countries in the field of skill development. In official
discussions, the two sides agreed to conclude an MOU which will have specific
provisions for setting up a joint working group and funding instrument to take
forward bilateral cooperation in skills development. Shri Ajit Mohan Sharan,
Secretary, D/o Sports visited Head Quarters of IOC in Lausanne (Switzerland)
from 23-25 March, 2015 for working out the modalities for the proposed
meeting of the delegation led by Mr. Thomas Bach, President, International
Olympic Committee (IOC) with Hon’ble PM of India on 27 April, 2015 to
discuss PM’s vision on developing sports in India. Shri Shaktikanta Das,
Revenue Secretary, led an Indian delegation to Switzerland on 15 October 2014
 for talks on information sharing on tax issues with the Swiss State Secretary for
Finance, Mr. Jacques de Watteville.

Bilateral Institutional Arrangements

Foreign Office Consultations (FOCs) were established in January 1996. The first
found of FOCs took place at the level of Secretaries in February 2000. Since
then, nine rounds of consultations have been held alternately in Berne and New
Delhi in February 2000, January 2003, September 2005, November, 2006,
January 2008, December 2009, December 2012 and November 2014
respectively (the last two at JS (CE) level). The last and 9th round of FOC was
held in Berne, Switzerland on 8 March, 2016 at Secretary (West) level.

5. GERMANY
India was amongst the first countries to establish diplomatic ties with the Federal
Republic of Germany after the Second World War. India and Germany have a
'Strategic Partnership' since 2001, which has been further strengthened with the
inception of the Intergovernmental Consultations (IGC) in 2011 at the level of Head of
Governments which allows for a comprehensive review of cooperation and
identification of areas of engagement. India is amongst a select group of countries with
which Germany has such a dialogue mechanism. Economic Cooperation is one of the
main pillars of India Germany relationship. India and Germany share a multifaceted
relationship across a diverse range of areas including political, defense and security,
economic, science and technology, education, cultural and people to people exchanges.

High level exchanges:

India and Germany have had regular exchange of visits at the highest level. PM
Shri Narendra Modi undertook his first official visit to Germany in April 2015,
when India was the Partner Country at the Hannover Messe-2015. PM Modi
visited Germany twice in 2017: the first was a bilateral visit on May 29-30, 2017
to Berlin for the 4th Intergovernmental Consultations and was followed by a
visit on July 6-8, 2017 to Hamburg to attend the G20 Summit. At the invitation
of Chancellor Merkel, PM visited Berlin for a short official visit in April 20,
2018, on his return journey from CHOGM Summit in London. PM and
Chancellor met on Dec 01, 2018 on the sidelines of G20 Summit in Buenos
Aires. German President Dr. Frank-Walter Steinmeier paid a 5 day State Visit to
India in March 2018. Chancellor Merkel visited India in 2007, 2011 and in
October 2015. German Defence Minister Von der Leyen visited India in 2015.

Parliamentary Exchanges:

There is an Indo-German Parliamentary Friendship Group, in German

Bundestag since 1971. The Indo-German Parliamentary Friendship Group
(constituted in May 2018) for the present term of German Parliament consists of
21 Members from all the six parties represented in the German Parliament and is
led by Mr. Dirk Wiese, MP. A Goodwill Delegation of Members of Parliament
visited Germany from October 17-19, 2018. The 9 member bipartisan
delegation, led by Minister of State for Parliamentary Affairs Shri Arjun Ram
Meghwal, consisted of 6 members from the Lok Sabha and 2 members from the
 Rajya Sabha. This was the first visit of a Parliamentary Delegation from India to
Germany in the current term of the two houses of the Parliament. The
Delegation met with the Vice President of Bundestag, Deputy Chairperson of
the Committee on Digitalization and the Chairperson of the Foreign Affairs
Committee of the Bundestag on October 18 and 19th, 2018. A German
Parliamentary Delegation had visited India in 2015.

Convergence on global issues:

India and Germany work together within the G4 framework for UN reforms.
Germany has provided consistent support to India’s candidature for the
membership of Multilateral Export Control regimes. India and Germany share
similar concerns on Terrorism and support early conclusion of the
Comprehensive Convention on International Terrorism.

Defence Cooperation:

India-Germany Defence Cooperation Agreement (2006) provides a framework

for bilateral defence cooperation. The defence dialogue mechanisms include
High Defence Committee meetings at the level of Defence Secretaries. Both
sides had detailed discussion on defence cooperation during the visit of German
Defence Minister to India in May 2015. There are regular visits of Defence
Personnel between the countries. Delegations of the National Defence College
(NDC) visited Germany in 2017 and 2018. German companies export defence
related equipment and machinery parts to our Ministry of Defence.

Economic & Commercial Relations:

Germany is India's largest trading partner in Europe. India was ranked 26th in
Germany's global trade during 2017. Bilateral trade increased to US$ 21.98 bn
(2017-18), a growth of 17.15%. In 2017-18, India’s exports were worth US$
8.68 billion to Germany and imports were worth US$ 13.29 billion. Germany is
the 7th largest foreign direct investor in India. Germany's total FDI in India from
 April 2000 until June 2018 amounted to US$ 10.99 billion. There are more than
1700 German companies active in India and over 600 Indo-German Joint
Ventures in operation. German investments in India are mainly in the sectors of
transportation, electrical equipment, metallurgical industries, services sector
(particularly insurance), chemicals, construction activity, trading and
automobiles. Indian Corporate entities have invested over US$ 7 billion in
Germany. There are around 200 Indian companies operating in Germany.
Important sectors in Germany for Indian investments are IT, automotive,
pharma and biotech. Germany has been an important development cooperation
partner since 1958. Total bilateral Technical and Financial Cooperation,
amounts to €16.98 billion. Energy, sustainable economic development and
environment & management of natural resources are priority areas under
development cooperation.

Facilitating Trade:

A Fast-Track System for German companies has been set up in Department of

Industrial Policy and Promotion (DIPP), as agreed between the two sides at the
3rd Inter Governmental Consultations in 2015. To facilitate the entry of German
Mittelstand in India, the Embassy of India, Berlin had launched the Make in
India Mittelstand (MIIM) Programme in September 2015. Currently, 123
German Mittelstand (MSMEs) companies are being facilitated through MIIM
Programme for their market entry and investment in India.

Science & Technology:

The Indo-German Science & Technology cooperative program is implemented

under an Inter-governmental Agreement on “Cooperation in Scientific Research
and Technological Development” signed on May 1974. India's scientific
establishments have close partnerships with premier German R&D institutions,
including the Max Planck Society, Fraunhofer Institutions, Leibniz association,
Helmoltz association and the Alexander von Humboldt Foundation. Through an
agreement signed in 2010 the bilateral IndoGerman Science and Technology
 Centre (IGSTC) was established as a flagship initiative of Government of India
(DST) and Government of Germany (BMBF) to promote research partnership of
industrial relevance. IGSTC started operating from Gurgaon in 2011. Both the
Governments in 2015 agreed to extend the IGSTC for another five years starting
from 2017 with a doubling of funding from Euro 2 million to 4 million from
each side. India has invested in major science projects in Germany such as the
Facility for Anti-Proton and Ion Research (FAIR) at Darmstadt and the
Deutsche Elektronen Synchrotron (DESY) for experiments in advanced
materials and particle physics. DST and DAAD German Academic Exchange
Service) are also jointly supporting an Indo-German Centre on Sustainability at
IIT Madras with RWTH Aachen University, TU9 and CAU, Kiel from German
side. DST-DAAD Project based Personnel Exchange Programme (PPP)
launched in 1998 has expanded to more than 325 joint research projects
enabling focused interaction through exchange of about 600 scientists/ research
students from each side. The Program has resulted in more than 700 joint
publications; and participation of more than 2000 PhD students from both sides.
The GIAN Initiative has been well-received in Germany and so far around 90
German academicians have been selected for courses in higher educational
institutes of India.

Culture:

India and Germany have a long tradition of academic and cultural exchange. There is
interest in Germany in Indian dance, music and literature as well as motion picture and
TV industry. Indian films and artists regularly feature at the Berlin International Film
Festival and at other festivals across Germany. Germany’s Federal Government
Commissioner for Culture and Media, Dr. Monika Gruetters visited India in
September 2018 and met with MoS Culture Shri Mahesh Sharma and MoS
Information and Broadcasting Col. Shri Rajyavardhan Singh Rathore. A delegation
from Ministry of Information & Broadcasting led by Mr. Karan Johar participated at
the Berlin Film Festival (Berlinale) in February 2018. The Indo-German Society is
 engaged in promoting inter-cultural understanding by bringing together people of both
countries and conveying information about modern India to the German public.

6. HONG KONG
India’s relations with Hong Kong are historical and date back to the 1840s. India and
Hong Kong have been trading with each other since the middle of the 19th century;
relations between the two people have been warm and cordial; and, Hong Kong has for
long been home to a large Indian community, many of who arrived here more than a
century and half ago. The Commission for India in Hong Kong was set up in 1951 and
it was re-designated as Consulate General of India on 15 October 1996 in advance of
China’s assumption of sovereignty over Hong Kong on July 1, 1997. The Consulate
also has accreditation to Macau, which reverted from Portuguese to Chinese
sovereignty on December 19, 1999.

Political:

The recent years have seen relations between India and Hong Kong expand rapidly.
There are around 1,500 Indian companies registered in Hong Kong, and their activities
range from services, investment finance, banking, industries, transportation,
information technology and telecommunications. Hong Kong is also host to a large
number of Indian professionals in banking, IT and shipping. Ten public sector banks
and three private sector banks from India are currently operating in Hong Kong.
Numerous global financial majors, investment institutions and fund managers
operating in India have their regional headquarters in Hong Kong. Foreign Direct
Investment to India from Hong Kong has been increasing in recent years. Hong Kong
is also a major sourcing centre for Indian companies and it has emerged as a major re-
exporter to Mainland China of items it imports from India. Against the background of
fast evolving bilateral relationship, the Hon’ble Donald Tsang, the then Chief
Executive of Hong Kong paid a visit to India in October 2010. This was the highest-
level visit by a Hong Kong government official to India. The Chief Executive met
senior government officials and interacted with top business leaders in India during his
visit.

Bilateral Agreements:

Agreements concluded with Hong Kong include Agreement on Reciprocal

Enforcement of Judgements (1968), [which was re-notified by Government of India in
July 2012 due to a change in the nomenclature of Hong Kong courts following
handover of sovereignty to China in 1997], Air Services Agreement (1996), Customs
Cooperation Agreement (1997), Surrender of Fugitive Offenders (1997), and
Agreement on Mutual Legal Assistance in Criminal Matters (2009). Text of an
Agreement on Transfer of Sentenced Persons was finalized in 2009. Certain
amendments subsequently proposed by the HKSAR side have also been finalized.
HKSAR side has conveyed its consent to sign the agreement and approval of
concerned authorities in India is awaited. The text of a Comprehensive Double
Taxation Avoidance Agreement between India and Hong is in the last stages of
deliberations before it is mutually agreed upon and the agreement will thereafter be
signed on completion of the obligatory procedures by both the governments.
Discussions are underway for concluding a Bilateral Investment Promotion &
Protection Agreement (BIPA). A proposal for an MOU for exchange of information
pertaining to drug trafficking and drug abuse between the Narcotics Control Bureau of
India and the Narcotics Bureau of Hong Kong is under consideration.

Bilateral Trade:

India-Hong Kong bilateral trade for the year 2012 stood at US$ 20,386 million
representing decrease of 11.7% compared to 2011.. Exports from India to Hong Kong
during this period were worth US$ 10,491 million, a decrease of 5.5%. Of this, goods
worth US$ 9780 million were re-exported to other countries from Hong Kong. Imports
from Hong Kong to India totalled US$ 9,895 million (17.5% decline). The balance of
trade for the year 2012 was in India’s favour to the extent of US$ 596 million. India’s
share in Hong Kong’s total trade during the year 2012 was 2.16%. Bilateral trade for
the period January to September 2013 stood at US $ 16,878 million showing a
decrease of 6.9% compared to the same period in 2012. Exports from India to Hong
Kong during this period were worth US $ 8,791 million, an increase of 7.6%. due to
increase in exports of natural or cultured pearls, precious or semi-precious stones,
precious metals and leather. Imports from Hong Kong to India totaled US $ 8,087
million recording an increase of 6.1% due to increase in imports of natural or cultured
pearls, precious or semi-precious stones, precious metals and electrical machinery.

During the period January to September 2012, India continued to retain its position as
the 7th largest trading partner of Hong Kong and India’s share in Hong Kong’s total
trade during this period was 2.3%. The balance of trade during this period was in
India’s favour amounting to US$ 704 million. Indian exports to Hong Kong primarily
include pearls, precious & semiprecious stones, leather, electrical machinery, cotton,
mineral fuels, fish & crustaceans, machinery, articles of apparel, organic chemicals
and plastics while Indian imports from Hong Kong include pearls, precious and semi-
precious stones, electrical machinery, machinery, optical & medical instruments,
clocks & watches, plastic and articles thereof, miscellaneous manufactured articles.

Indian Community:

Indian traders and defence personnel were with the British when they occupied Hong
Kong in 1841. Indians in Hong Kong have traditionally been drawn from the trading
community, with strong cultural and social links to India. The Indian community has
actively contributed to Hong Kong’s emergence as a hub of global finance and trade.
Members of the Indian community helped establish well known institutions in Hong
Kong, like the Hong Kong University, the Ruttonji Hospital and the Star Ferry.
Increasingly, a large number of Indian professionals are coming into Hong Kong,
working in the service industry, banking and finance, information technology,
shipping, etc. The Indian community in Hong Kong is estimated to be more than
45,000 and approximately half of them hold Indian passports. Sindhis, Gujaratis and
Punjabis (Sikh) form the largest component of the community.

7. Indonesia
Indian-Indonesian relations refer to the bilateral relations of India and Indonesia.
India and Indonesia are neighbours. India shares a border with Indonesia.
India's Andaman and Nicobar Islands share a maritime border with Indonesia along
the Andaman Sea.

The Indian-Indonesian relationship stretch back for almost two millennia. In 1950, the
first President of Indonesia, Sukarno, called upon the peoples of Indonesia and India to
"intensify the cordial relations" that had existed between the two countries "for more
than 1000 years" before they had been "disrupted" by colonial powers.

India has an embassy in Jakarta and Indonesia operates an embassy in Delhi. India

regards Indonesia as a key member of ASEAN. Both nations had agreed to establish a
strategic partnership. The two countries have significant bilateral trade.

India and Indonesia are among the largest democracies in the world. [6] Both are
member states of the G-20, the E7 (countries), the Non-aligned Movement, and
the United Nations.

India-Indonesia Bilateral Relations India and Indonesia have shared two millennia of
close cultural and commercial contacts. The Hindu, Buddhist and later Muslim faith
travelled to Indonesia from the shores of India. The shared culture, colonial history and
post-independence goals of political sovereignty, economic self-sufficiency and
independent foreign policy have unifying effect on the bilateral relations

Prime Minister Shri Narendra Modi and President Joko Widodo met in the side-lines
of G20 Summit at INTEX Osaka, Japan on 29 June 2019 where they discussed about
enhancing economic and maritime cooperation between the two countries. Prime
Minister Shri Narendra Modi visited Jakarta on 29-30 May 2018 at the invitation of
the President of Indonesia Mr. Joko Widodo. During this visit, both Leaders sagreed to
strengthen cooperation in all areas by establishing a New Comprehensive Strategic
Partnership to take Indonesia and India’s bilateral relationship into a new era.
President of Indonesia Mr. Joko Widodo visited New Delhi from 25-26 January, 2018
to be Chief Guest at the 69th Republic day celebrations of India along with other
Heads of States of ASEAN countries and to participate in the ASEAN-India
Commemorative Summit. Mr. Joko Widodo, President of Indonesia paid a State visit
to India from 12-13 December, 2016 at the invitation of Prime Minister Shri Narendra
Modi. President Joko Widodo and Prime Minister Modi held talks.

The two leaders, who are in Osaka, Japan for the G20 Summit, met in the morning and
discussed ways to boost bilateral ties and enhance cooperation in trade and investment.
According to Ministry of External Affairs spokesperson Raveesh Kumar, India and
Indonesia set a $50 billion target for bilateral trade by 2025.
Trade between the two countries in 2016 was $12.9 billion. It rose 28.7 per cent to
$18.13 billion in 2017 with Indonesia's exports to India reaching $14.08 billion and its
imports from India standing at $4.05 billion, according to Indonesia's Central Statistics
Agency.

8. SOUTH KOREA
India–South Korea relations have been relatively strong for 2,000 years,
although more progress arose during the past three decades. Korea and
India share a lot of similarities in every aspect. Since the formal
establishment of the diplomatic ties between the two countries in 1973,
several trade agreements have been reached: Agreement on Trade
Promotion and Economic and Technological Co-operation in 1974;
Agreement on Co-operation in Science & Technology in 1976; Convention
on Double Taxation Avoidance in 1985; and Bilateral Investment
Promotion/ Protection Agreement in 1996. Trade between the two nations
has increased exponentially, exemplified by the $530 million during the
fiscal year of 1992-1993, and the US$10 billion during 2006-2007.[1] It
further increased to US$17.6 billion in the year 2013.

During the 1997 Asian financial crisis, South Korean businesses sought to

increase access to the global markets, and began trade investments with
India.[1] The last two presidential visits from South Korea to India were in
2006 and 2018, and the embassy works between the two countries are seen
as needing improvements. Recently, there have been acknowledgments in
the Korean public and political spheres that expanding relations with India
should be a major economical and political priority for South Korea. Much
of the economic investments of South Korea have been drained into China;
[3]
 however, South Korea is currently the fifth largest source of investment
in India.[4] To the Times of India, former Korean President Roh Tae-
woo voiced his opinion that co-operation between India's software and
Korea's IT industries would bring very efficient and successful
outcomes. The two countries agreed to shift their focus to the revision of the
visa policies between the two countries, expansion of trade, and
establishment of free trade agreement to encourage further investment
between the two countries. Korean companies such
as LG and Samsung have established manufacturing and service facilities in
India, and several Korean construction companies won grants for a portion
of the many infrastructural building plans in India, such as the National
Highways Development Project. Tata Motors' purchase
of Daewoo Commercial Vehicles at the cost of US$102 million highlights
India's investments in Korea, which consist mostly of subcontracting.

Trade and economic relations have started to gather momentum again

following the implementation of CEPA in 2010 and the bilateral trade in
2011 crossed USD 20.5 billion registering a 70% growth over a two-year
period. A revised trade target of USD 40 billion by 2015 was set by PM
Singh and President Lee on 25 March 2012. However, bilateral trade has
since declined to USD 18.13 billion in 2014-15, USD 16.56 billion in 2015-
16, USD 16.82 billion in 2016-17, which finally recovered and posted a
positive growth of 30% in the first seven months of 2017. According to
Statistics Korea, Indian exports to Korea accounted for USD 2.91 billion
and imports accounts for USD 8.707 billion during January-July 2017,
marking a growth of 26% and 30.1% respectively. As mandated by both
leaders in 2015, both countries initiated negotiations to upgrade the CEPA
to enhance bilateral trade between the two countries. Accordingly, both
countries held two rounds of Director General level discussions and
recently on 23 September 2017 a Ministerial Level Joint Committee
Meeting on CEPA was co-Chaired by Mr. Suresh Prabhu, CIM and Mr.
Kim Hyun-chong, Trade Minister of South Korea. Major items of India’s
exports to Korea are mineral fuels/oil distillates (mainly naphtha), cereals,
iron and steel. Basic materials comprise the bulk of India’s exports to Korea
with Naphtha accounting 23.9% in 2016. Korea’s main export items are
automobile parts, telecommunication equipment, hot rolled iron products,
petroleum refined products, base lubricating oils, nuclear reactors,
mechanical appliances, electrical machinery & parts and iron and steel
products. Prime Minister’s visit led to a positive focus on India, with
shipbuilding, automobile, electronics, textiles, food processing and
manufacture being sectors of particular interest. Following that, revision of
India-ROK Bilateral Air Services Agreement in October 2015, tripling the
number of flight connections to 19 per week and organisation of the 1st
India-Korea Business Summit, jointly by Chosun Group, Korea’s leading
media group, and CII in New Delhi from 14-16 January 2016 created a
conducive environment for trade and businesses between the two countries.
The leadership from the top Korean conglomerates as well as Deputy
Speaker of the National Assembly, Vice Minister for Trade, Industry &
Energy attended the summit meeting, which also included an exclusive
roundtable meeting with the Hon’ble Prime Minister. India and South
Korea launched an initiative ‘Korea Plus’, as proposed by Prime Minister
Modi in June 2016 in India to promote and facilitate Korean Investments in
India. To give it much wider outreach and publicity, Embassy of India
organized a ‘Korea Plus’ event to introduce the initiative to Korean
businessmen and investors in South Korea in November 2016. The visit of
Finance Minister Arun Jaitley to South Korea from 14 to 17 June to co-
Chair the 5th India-Korea Financial Dialogue also resulted in signing of the
agreements to establish USD 9 billion in concessional credit and USD 1
billion in ODA funding for infrastructure development projects in India.
Following which, Chief Minister of Maharashtra visited South Korea from
26 to 27 September and concluded an MoU with South Korean Ministry of
Land, Transport and Energy seeking Korean investments in infrastructure
projects in Maharashtra, especially Nagpur-Mumbai Expressway project. In
addition, State Governments of Chhattisgarh and Telegana visited South
Korea in 2017 exploring business ties and Korean investments in their
respective states. Major Korean conglomerates such as Samsung, Hyundai
Motors and LG have made significant investments into India, estimated at
over $4.43 billion (as of March 2017). Recently, Kia motors, a sister
company of Hyundai Group, announced an investment of USD 1.1 billion
to set up a manufacturing unit in Andhra Pradesh and Samsung Electronics
announced a USD 760 million investment to expand production facilities in
India. In addition, there are 603 large and small Korean firms, which have
offices in India. From the Indian side, investments in ROK is nearing USD
3 billion. Novelis, a Hindalco subsidiary, acquired a Korean aluminium
company by investing about $600 million. Mahindra & Mahindra acquired
a majority stake in SsangYong Motors, the country's 4th largest auto
manufacturer, in March 2011, with an investment of about $360 million.
Tata Motors acquired Daewoo Commercial Vehicle Company for $102
million in March 2004. Other Indian companies present in India include IT
majors, Indian Overseas Bank, State Bank of India etc. The Indian Chamber
of Commerce in Korea comprising Indian and Korean companies play a
constructive role in promoting trade and investments linkages between the
two countries and assist Embassy in organising seminars and events on
business promotions.

India and South Korea have set a target to increase bilateral trade to $50
billion by 2030 from $20 billion in 2017-18 and to speedily conclude
negotiations to upgrade the bilateral Comprehensive Economic Partnership
Agreement (CEPA).

Prime Minister Narendra Modi and South Korean President Moon Jae-in, in
a joint statement following their bilateral meeting on Tuesday, welcomed
the finalisation of the elements of an Early Harvest Package (EHP) that
would lead to an upgraded CEPA.

Intra-Industry Trade between India and Korea In this section, the Intra-
Industry Trade (IIT) index is computed, which shows the gains derived
from international trade over and above those associated with comparative
advantage. This is because IIT allows a country to take advantage of larger
markets. IIT refers to simultaneous exports and imports of products within
the same product category. The GrubelLloyd (G-L) index is the most
commonly used index to measure intra-industry trade. It computes the ratio
of net exports in a product category to its total trade that takes values from 0
to 1 or from 0 to 100 if multiplied by 100. The G-L index takes a value of 0
if there are no exports or imports of a particular product group, i.e. no IIT in
that particular product category. If exports exactly match imports, both
being positive, the G-L index value equals 100. IIT is driven by economies
of scale and productivity gains. By being engaged in IIT, a country can
reduce the number of similar products it produces and benefit from scale
economies and specialisation. A higher IIT value suggests that these sources
of gains are being exploited. It also indicates that the adjustment cost would
be lower when compared to inter-industry trade in the process of trade
expansion.

9. MALAYSIA
India-Malaysia trade relations have expanded significantly since 1991 so much so,
that currently, India is Malaysia's largest trading partner while Malaysia is India's
second largest trading partner in the Association of South East Asian Nations
(ASEAN).
 From India's perspective, the following companies have established their
operations in Malaysia.

 61 joint ventures in sectors ranging from palm oil refining, power, railways,
civil construction, training and information technology.
 67 Indian IT companies enjoy Multimedia Super Corridor (MSC) status in
Malaysia.
 There are about 20 other companies in various manufacturing sectors in
Malaysia.

Trade Estimates
The following estimates can be drawn in favour of trade between India and
Malaysia:

 In 2006, India-Malaysia trade reached a record US $ 6.58 billion, registering a

growth of approximately 22.84% over the previous year and ten times the amount that
existed fourteen years ago.
 Malaysia has traditionally enjoyed a handsome surplus, of between US $ 1
billion to US $ 1.5 billion, in its trade with India.
 Trade between India and Malaysia has expanded steadily from US $ 0.6
million in 1992 to US $ 4.3 billion in 2004, US $ 5.1 billion in 2005 and US $ 6.58
billion in 2006.
 India's exports have increased by 98 % from US $ 672.5 million in 2003 and US
$ 1.3 billion in 2004. However, the trend could not be sustained in 2005, with exports
registering a 15 % decline to US $ 1.1 billion as against the comparable figure for
2004.

India's export basket to Malaysia is large and diversified consisting of meat and
meat preparations, sugar, rice (other than basmati), wheat, fresh vegetables and fruits,
cotton yarn, RMG cotton and accessories, primary and semi-finished iron, made-ups,
fabrics, machinery and instruments, electronic goods and metal manufactures.

Malaysia's major exports to India during 2006 were Crude Petroleum, Palm Oil,
Electronic & Electrical products, Chemicals & Chemical products and Petroleum
products.

Though balance of trade has favoured Malaysia, primarily because India imports
expensive commodities from the former like palm oil and petroleum on a large scale
the India Malaysia trade is benefiting both nations.

10. SINGAPORE
Singapore is India’s fourth largest export market and the country’s biggest trade
partner among the Association of Southeast Asian (ASEAN) states.2 The ASEAN
countries account for 9.5 percent of India’s total commodity exports. Within ASEAN,
Singapore alone absorbs 4.5 percent of India’s exports. On the other hand, Singapore
is India’s 10th largest source of imports. At present, it accounts for 3.27 percent of
India’s total commodity imports.

Commodity Profile of Bilateral Trade

 India’s Exports to Singapore

Petroleum (including mineral oils, crude and refined products) is India’s main
export to Singapore. In 2006-07, India’s petroleum exports to Singapore were
 worth US$3.4 billion. This was an almost three-fold increase from US$1.24
billion of such exports in 2005-06. Singapore has emerged as India’s second
largest export market for petroleum products after the United Arab Emirates.
Currently, around 18 percent of India’s petroleum exports are being absorbed by
Singapore. Within petroleum, refined products occupy significant shares with
refined unleaded motor spirit (both regular and premium), high-speed diesel and
aviation turbine fuel being the leading exports. Otherwise, fuel oils and naphtha
reformate or preparations for preparing spirits are among India’s largest
petroleum exports (in value terms) to Singapore.

Other leading Indian exports to Singapore include gems and jewellery,

machinery and instruments, transport equipment, electronic goods and non-
ferrous metals. Articles of jewellery and other precious metals made in India
enjoy strong demand in Singapore. Nonindustrial diamonds and semi-
manufactured gold also figure among leading gems and jewellery exports. Such
exports, however, are declining in recent years. While in 2005-06, India
exported US$1.24 billion of gems and jewellery to Singapore, which was around
eight percent of its total jewellery exports, in 2006-07, such exports have come
down to US$149.97 million representing only 1 percent of Indian jewellery
exports.

Singapore accounts for around three percent of India’s machinery and

instrument exports. India exports a diverse array of machines and instruments to
Singapore. These include : printing machinery (parts and accessories),
compression ignition engines, aircraft engines, tool holders and machine die
heads, boring or sinking machinery, electrically operated textile spinning
machines, different categories of valves, taps and similar appliances, window
and wall air-conditioners, roller bearings, machine parts and mechanical
appliances, accessories, compressors, printed circuit boards, water and
filtering/purifying machinery and centrifugal electrically operated pumps.

 India’s Imports from Singapore

India’s main imports from Singapore include electronic goods, non-electrical
machinery, organic chemicals, project goods, transport equipment, artificial resins
and professional instruments (non-electronic). Electronic items are India’s largest
imports from Singapore. The value of such imports has increased from US$1.31
billion in 2005-06 to US$1.65 billion in 2006-07. Out of around 440 different
electronic products imported by India from Singapore, some of the leading ones are
photosensitive transistor diodes, electronic integrated circuits, telephones for
cellular and wireless networks, apparatus for control and distribution of electricity,
electrical machinery parts, laser and magnetic discs for reproducing purpose,
optical fiber cables, remote control apparatus (excluding radio), apparatus for
switching, static convertors, generating sets with spark ignition, fixed capacitors,
transmission apparatus, digital cameras, smart cards, video recorders and parts for
line telephone apparatus.

Non-electrical machinery is another key import for India from Singapore. The
value of such imports increased from US$265.6 million in 2005-06 to US$404.5
million in 2006-07. India imports more than 500 different items figuring in this
product category. Among these, the relatively higher imports in value terms include
parts and accessories of machines and mechanical appliances, hard disk drives,
automatic data processing machines and automatic teller machines, processing
units, plotters, personal computers, laptops (including notebooks and sub-
notebooks), portable digital computers, ink-filled printer cartridges, combination
printers, printer copies printing by laser and ink-jet processes, optical disk drives,
valves, taps and cocks, circular knitting machines, bearings, rubber or plastic
moulds, pneumatic elevators and passenger lifts, bucket and shovels for bulldozers,
electron beam microscopes, control and adaptor units, coal cutters, assembled
printed circuit boards and industrial robots.

Organic chemicals are another important product group among India’s imports
from Singapore. Value of organic chemical imports increased to US$543.8 million
in 2006-07 from US$411.08 million in 2005-06. Some important organic chemicals
imported by India from Singapore are styrene, p-xylene, toluene, benzene, propan-
 1-ol, propylene glycol, phenols and monophenols, acetic acid, acetone, vinyl
acetate, esters of acrylic acid, aromatic polycarboxylic acids and isocyanates.

Factors Negatively Affecting India’s BOP

The role of Balance of Payments in impacting the economy of any particular nation
cannot be overlooked with India being no exception. Over the years with the external
liberalization happening, the Indian economy has gradually evolved into a major world
force which cannot be ignored. While we ease the trade policies and ultimately
increase the chances of exposure to the world, greater risks do come along
concurrently. India primarily is an exporter of agricultural products. However ,
hampered by its two major importing commodities i.e. Crude oil and Gold, there has
always been a huge gap in terms of the imports dominating the exports which
eventually puts stress on current account and ultimately balance of payments are
pushed into deficits. India’s current account remains vulnerable to any major
movement in the trade account. Any rise in oil prices or any major crisis disturbing
global business cycle puts our current account under stress. Ideally, the desirable
scenario would be to strive for a long term stable and viable balance of payments
position which can be achieved through the financing of current account position on a
sustainable basis by net capital movements on terms that are compatible and in line
with development and growth prospects, debt servicing capacity and macro-economic
stability of the nation. Hence, balance of payments is inter-linked and disequilibrium
in one sector; say external sector is transmitted to the other sectors and vice versa.
Thus, there is a crucial need to achieve both internal and external balance.
A balance of payments crisis can have a dismantling effect on the efficiency of the
entire economy because it creates disequilibrium between the money supply and
demand. In monetary terms, disequilibrium has undesirable effects on aggregate
expenditure for goods and services (absorption). In this regard, IMF (2000) argues that
the balance of payments problems are caused due to the disequilibrium in exports and
imports of goods and services. Disequilibrium may take place either in the form of
deficit or in the form of surplus Disequilibrium of Deficit arises when our receipts
from the foreigners fall below our payment to foreigners. It arises when the effective
demand for foreign exchange of the country exceeds its supply at a given rate of
exchange. This is called an 'unfavourable balance'. Disequilibrium of Surplus arises
when the receipts of the country exceed its payments. Such a situation arises when the
effective demand for foreign exchange is less than its supply. Such a surplus
disequilibrium is termed as 'favourable balance'.

There are various factors that causes negative impact on Balance of Payments for
India. These are –

 Development Programmes
Developing countries which have embarked upon planned development
programmes require to import capital goods, some raw materials which are not
available at home and highly skilled and specialized manpower. Since
development is a continuous process, imports of these items continue for the
long time landing these countries in a balance of payment deficit.

 Demonstration Effect
When the people in the less developed countries imitate the consumption pattern
of the people in the developed countries, their import will increase. Their export
may remain constant or decline causing disequilibrium in the balance of
payments.
 Natural Factors
Natural calamities such as the failure of rains or the coming floods may easily
cause disequilibrium in the balance of payments by adversely affecting
agriculture and industrial production in the country. The exports may decline
while the imports may go up causing a discrepancy in the country's balance of
payments. 4) Cyclical Fluctuations Business fluctuations introduced by the
operations of the trade cycles may also cause disequilibrium in the country's
balance of payments. For example, if there occurs a business recession in
foreign countries, it may easily cause a fall in the exports and exchange earning
of the country concerned, resulting in a disequilibrium in the balance of
payments.
 Inflation
An increase in income and price level owing to rapid economic development in
developing countries, will increase imports and reduce exports causing a deficit
in balance of payments. The poor marketing facilities of the developing
countries have pushed them into huge deficits.

 Flight of Capital
Due to speculative reasons, countries may lose foreign exchange or gold stocks
People in developing countries may also shift their capital to developed
countries to safeguard against political uncertainties. These capital movements
adversely affect the balance of payments position.

 Globalization
Due to globalization there has been more liberal and open atmosphere for
international movement of goods, services and capital. Competition has been
increased due to the globalization of international economic relations. The
 emerging new global economic order has brought in certain problems for some
countries which have resulted in the balance of payments disequilibrium.

 Population Growth
Most countries experience an increase in the population and in some like India
and China the population is not only large but increases at a faster rate. To meet
their needs, imports become essential and the quantity of imports may increase
as population increases.

Apart from these, there are variables like the supply factors, production function, the
state of technology, tastes, distribution of income, economic conditions, the state of
expectations, etc. which also has a negative effect on BoP. So, if there is a change in
any of these variables and there are no appropriate changes in other variables,
disequilibrium in balance of payments will occur.

INDIA – EXPORTS & IMPORTS

Exports in June 2019 were USD25.01 billion, as compared to USD 27.70 billion in
June 2018, exhibiting a negative growth of 9.71%
Imports in June 2019 were USD40.29billion (Rs. 2,79,771.07crore), which was
9.06% lower in Dollar terms and 6.85% lower in Rupee terms over imports of
USD44.30billion (Rs.3,00,351.83crore) in June 2018

QUALITATIVE ANALYSIS

India had trade deficit with as many as 10 member countries, including China,
South Korea and Australia, of the RCEP grouping of 16 nations which have been
negotiating a mega trade pact since November 2012. Experts quote that India
needs to be cautious for the trade deficit as it is increasing. According to the
commerce ministry data, India's trade deficit -- the difference between imports
and exports -- with seven countries (Indonesia, Thailand, China, Japan, South
Korea, Australia and New Zealand) of RCEP has in fact increased in 2017-18 as
compared to the previous fiscal. Increasing Trade Deficit is impacting the
Domestic Manufacturers of India. Experts have given a mixed reaction on the
impact of increasing this gap on India's position in negotiating this mega free
trade agreement. India would get greater market access in other countries not
only in terms of goods, but in services and investments also.
On the other hand, India needs to be cautious while negotiating the pact as trade
deficit is increasing with several of the RCEP member nations, which would
impact domestic manufacturers.
Free trade agreements are not about only giving market access, but also getting
that access in other countries. Our exports to countries like Singapore, with
which India has trade surplus, is not increasing with healthy pace. India does not
have free trade agreement with two of its biggest trading partners - the US and
China - but the country has highest positive balance of trade with the US, while it
has highest deficit with China.
Pressure is also mounting on India for early conclusion of the proposed trade
pact. Member countries are looking to conclude the talks by end of this year but
a lot of issues are yet to be finalised including the number of products over
which duties will be eliminated. Domestic steel and other metal industries wants
these sectors to be kept out of the deal. Under services, India wants greater
market access for its professionals in the proposed agreement.