Thailand, the second largest economy in ASEAN after Indonesia, is an upper middle-income country with an open economy, a gross domestic product (GDP) of $503.5 billion and a negative 6.1 percent annual growth in 2020. Thailand is an export-dependent economy. Reports suggest that Thailand had exported a total of $226.7 billion worth of goods in 2020. The top export items in terms of value are motor cars, parts and accessories (9%), electronic goods and computers (8%), precious stones and jewelry (8%), rubber products (5%), and plastics (3%).
Trade relations between India and Thailand have grown by leaps and bounds during the last few years, though it halted momentarily due to the global pandemic. In 2019, India did not export any services to Thailand nor did any export happen from Thailand to India.
The Thai economy is projected to grow by one to two percent in 2021 as the negative impact of a surge of COVID-19 in Thailand offsets the positive effects of the recovery of the world economy and global trade volumes, and government stimulus measures. Thailand owes its close trade and diplomatic ties with India to historic, cultural and social reasons.
Two-way trade in 2018 totalled USD12.46 billion with USD7.60 billion in Thailand exports to India and USD4.86 billion in Indian exports to Thailand. Thailand ranks as India’s fifth-largest trading partner in ASEAN.
The ASEAN Economic Community (AEC) blueprint 2025 is projected to boost investment and business opportunities in the coming years. The ultimate aim of the AEC blueprint is to achieve the ASEAN common market with intermediate steps taken to gradually bring greater integration among the member countries.
The benefits of this blueprint to countries doing business with ASEAN would be in the form of seamless movement of goods, tariff rationalisation and a more open and predictable investment regime in all ASEAN countries. This broadens up the opportunity for Indian companies to access the USD 2.8 trillion ASEAN markets through Thailand.
An ASEAN common market has huge potential for anyone trading with it. Economists predict it to become the fourth-largest economy in the world by 2030 surpassed only by the US, China and the EU.
Both Thailand and India have been touted as beneficiaries of the protracted trade war between the US and China. There is no sign of this abating any time soon. Thus many businesses are planning to or are already in the process of re-siting their manufacturing facilities to other locations including India, Thailand and Vietnam (which is an ASEAN country).The SEC is developed with the vision of it becoming the gateway to South Asia. As part of this vision, the Port of Authority of Thailand(PAT) aims to make Ranong Port the logistics gateway between Thailand and India. The capacity of Ranong Port will be increased by six and a half times to reach a capacity of 500,000 TEUs per year by approximately 2022.
Items traded from India to Thailand
In 2019, India exported $4.39B to Thailand. The main products that India exported to Thailand are Diamonds ($653M), Combustion Engines ($401M), and Vehicle Parts ($173M). During the last 24 years the exports of India to Thailand have increased at an annualized rate of 8.6%, from $605M in 1995 to $4.39B in 2019.
Items traded from Thailand to India
In 2019, Thailand exported $7.06B to India. The main products that Thailand exported to India were Air Conditioners ($317M), Vehicle Parts ($295M), and Polyacetals ($282M). During the last 24 years, the exports of Thailand to India have increased at an annualized rate of 14.1%, from $297M in 1995 to $7.06B in 2019.
COMPARISON
In 2019, India ranked 44 in the Economic Complexity Index (ECI 0.59), and 15 in total exports ($330B). That same year, Thailand ranked 31 in the Economic Complexity Index (ECI 1), and 23 in total exports ($249B).
Top Items exported from Thailand to India include
- Electronics – Air Conditioners, Computers
- Machinery – Engine parts
- Automobile and automobile parts and accessories
- Jewellery
- Rubber products
- Video displays
- Polyacetals
- Beauty Products
- Vehicle parts
- Base metal watches
Items coming the other way from India To Thailand are
- Crude oil
- Chemicals
- Machinery – heating machinery, etc
- Diamonds
- Jewellery including gold and silver
- Semi-finished iron, Iron and steel products
- Food products
- Combustion Engines
- pepper
- Raw Aluminium
- Ferroalloys’
- Grapes
- Groundnut
In 2019, the products from India that paid the highest import tariffs to enter Thailand were Food preparations (150%) and Grape wines, sparkling (150%).
The fast growing Indian market remains attractive for Thai investors, given the vast opportunities available in the infrastructure sector, tourism and retail industries. India continues to remain an interesting market for the export of goods from Thailand. Currently, Thai goods have benefited from tax reduction under ASEAN-India FTA in goods. For Thailand, India is like a gateway to South Asia and beyond. As a result of the reduced tariff rates and new initiatives adopted by both countries, trade between the two countries increased manifold in recent years.
Major Indian Companies in Thailand include Tata group – Tata Motors (Thailand), Tata Steel Thailand and Tata Consultancy Services, The Aditya Birla Group, Mahindra Satyam, Ranbaxy, Dabur, Lupin, NIIT, Kirloskar Brothers Ltd, Punj Lloyd Group, Polyplex (Thailand) Public Co. Ltd, Precious Shipping PCL and Usha Siam Steel Industries PCL. It is known that companies like Jindal group [steel], Ashok Leylands [automobiles], Mahindras [automobiles], Escorts, D.R. Hotels (Nellore) Pvt. Ltd. and D.R. Utthama (Thailand) Co. Ltd., are also keen to expand their operations into Thailand.
Leading Thai companies in the fields of Agro-processing, construction, automotive, engineering and banking have an active and growing business presence in India
The two countries need to further expand their strategic, security, defence, and economic cooperation gave the geostrategic challenges as well as huge untapped potential. Both sides should invest the necessary energy, focus, and political capital in the relationship so that it can prosper rapidly to the advantage of the people of the two countries. Both Thai and Indian leaders are aware of the threats and impediments ahead and are determined to overcome them. They are also conscious of the huge existing opportunities and strengths and are resolute to harness them to mutual benefit and advantage.