Tony Cripps, Chief Executive Officer, HSBC Singapore
India is home to 18 per cent of the world’s population and achieved 7.6 per cent growth in 2016. Meanwhile, the 10-member Association of Southeast Asian Nations (ASEAN) has a GDP of USD2.6 billion and a population of 630 million. Both have a rapidly expanding middle class, with consumer tastes changing as incomes rise.
Given that both economic blocs are at similar stages of development, one might assume that they are competing for international trade and investment. In fact, India and ASEAN believe cooperation makes sense.
At the ASEAN Business Forum held in Manila in November, for example, India’s Prime Minister Narendra Modi said the country’s ‘Act East policy’ has ASEAN at the centre of its engagement. He vowed to bring India’s economic and business ties with the region up to the level of their “exceptionally good political and people-to-people relations”.
ASEAN is currently India’s fourth largest trading partner, accounting for 10 per cent of India’s total trade, while India is ASEAN’s seventh-largest trading partner. There is every reason to believe trade and investment ties between the two blocs will gain momentum in the coming years, as they have set a target of at least USD200 billion in two-way trade by 2022.
Cooperation is already growing across a number of sectors, including projects to improve infrastructure connections, strategic initiatives and business deals. For example:
Continued success for the India-ASEAN relationship will depend, in part, on their willingness to reduce trade and business barriers.
The focus currently is on the completion of the Regional Comprehensive Economic Partnership (RCEP). This trade accord, spearheaded by ASEAN, involves countries including India and China and would cover 50 per cent of the world’s population.
India has warmed to RCEP recently, committing to eliminate up to 80 per cent of its goods tariffs in return for greater market access to other signatory members’ service sectors and freer movement of its labour. This would unlock significant growth potential for India’s burgeoning IT services sector, which constitutes 48 per cent of its total exports. Overall, the conclusion of the deal could boost exports among the participating countries by 4 per cent in the long term.
India and ASEAN may not have the heft of the US, EU or Chinese economies. But they are rapidly becoming powerhouses that play a growing role in the global economy. Deeper ties will help both gain further international significance.
This article is issued by The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch (“HSBC” or “we”).
The information contained in this article is derived from sources we believe to be reliable but which we have not independently verified. HSBC makes no representation or warranty (express or implied) of any nature nor is any responsibility of any kind accepted with respect to the completeness or accuracy of any information, projection, representation or warranty (expressed or implied) in, or omission from, this article. No liability is accepted whatsoever for any direct, indirect or consequential loss (whether arising in contract, tort or otherwise) arising from the use of or reliance on this article any information contained herein by the recipient or any third party. If you seek to rely in any way whatsoever upon any content contained in this article, you do so at your own risk.
This article does not constitute an offer or solicitation for, or advice that you should enter into or start using, any of the arrangement, product or services mentioned in this document. Recipients should not rely on this document in making any decisions and they should make their own independent appraisal of and investigations into the information described in this article. No consideration has been given to the particular business objectives, financial situation or particular needs of any recipient. Any examples given are for the purposes of illustration only.
All the information set out in this article is provided in good faith to the best of HSBC’s knowledge and understanding of the current law, rules, regulations, directions and guidelines governing or otherwise applicable to the relevant services offered by HSBC but HSBC makes no guarantee, representation or warranty and accepts no liability as to its accuracy or completeness. Future changes in such law, rules, regulations etc. could affect the information in this article but HSBC is under no obligation to keep this information current or to update it. Expressions of opinion are those of HSBC only and are subject to change without notice.
Copyright © The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch 2018. All rights reserved. No part of this article may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC.
Issued by The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch.