The ET-ILC roundtable discussion held in collaboration with International Business Division (IBD), Singapore Indian Chamber of Commerce and Industry (SICCI), as part of the Economic Times Global Business Summit 3.0, focused on how India can reform trade policies and existing business relationships to recalibrate growth strategies especially in relation to ASEAN. The panel included top leaders of India Inc and Singapore and members of the Indian government.
As per a McKinsey survey published in September, 40% of respondents consider the scenario of the global economy’s growth rate being -11% when seen against Q4 2019 growth rates, as most probable. And countries like Thailand, Malaysia and the Philippines are likely to see a more severe impact (approx -13%).
In developing Asia, subdued demand and low oil prices will neutralize the supply disruptions. The September forecast from the Asian Development Bank (ADB) estimates regional inflation of 2.9% in 2020 and 2.3% in 2021. According to ADB, GDP will decline by 0.7% this year, the first reduction in 60 years. However, looking at the quick and frequent revisions in GDP and growth estimates over the past six months, it is possible that these numbers will change along with consumer sentiment and recovery from Covid-19.
ASEAN trade became concentrated in a few extra-regional markets between 2010 and 2018, while less was done to expand intra-regional trade. Now may be the time for ASEAN to look at strengthening intra-regional relationships. “This forum is critical to build insight into the challenges and opportunities that lie ahead of us. Close ASEAN partnership can accelerate an inclusive and sustainable trajectory towards growth for the region. This is an opportune time for members to reap technology transfer gains from participation in the global value chain and focus on innovation driven improvement within its markets. Dialogue sessions like this make it possible for industry leaders to examine the situation more closely” says Prasoon Mukherjee, Chairman, IBD, Singapore Indian Chamber of Commerce (SICCI).
As India works to balance its self-reliance (atmanirbharta) with increased business collaboration with ASEAN, there is scope to improve its ranking on FDI restrictiveness, which currently stands at 0.21 as per OECD ( 0 being open and 1 being a closed economy). “Singapore, Indonesia, Malaysia, and the Philippines could be the potential new markets for India. The International Trade Center estimates India’s untapped export potential to be around $201 Bn. Increased collaboration is essential to identify the non-trade barriers and harness the full potential of FTAs. It is recommended that these discussions must be pursued by the government at various bilateral and multilateral forums such as this,” says V. Vijayasai Reddy, Member of Parliament – Andhra Pradesh, Chairman – Parliamentary Standing Committee on Commerce, National General Secretary – YSR Congress Party.
India currently has Free Trade Agreements (FTAs) with Japan and South Korea but not with many other developed countries in the ASEAN region. India can improve and then leverage its supply chain to attract more investments from Japan, which does a large amount of business with China. While all countries are looking at diversifying their supply chains, this doesn’t necessarily mean that they are looking to relocate from China. Either way, trade experts agree that India is a worthy contender as an FDI destination and as a large and growing market for international products. India’s untapped export potential is indicated by the Export Preparedness Index (EPI), currently, 39 out of 100, which shows the tremendous transformation that India can make in this area.
“There is tremendous potential for India and Japan to collaborate in the areas of Digital Transformation (DX), such as mobility, AI and healthcare under Japan India Digital Partnership. India is a promising partner especially if it further modernizes its logistics and infrastructure,” says, Yasuyuki Murahashi, Chief Director-General, Japan External Trade Organization (JETRO).
The central government has already approved the setting up of Empowered Group of Secretaries (EGoS) and Project Development Cells (PDCs) to achieve its vision of $5 trillion economy by 2024-2025 which will help with speedy clearances and aid facilitation of key projects. The ASEAN region has been less affected by the pandemic when compared to the rest of the world and is among the topmost investment destinations for European and American investors. While some sectors like aviation may not recover till 2023, if India works on developing its trade relationships with ASEAN especially through a digitization push, it will be able to build resilience and handle any unpredictable future shocks.
In addition to Prasoon Mukherjee, Chairman, International Business Division(IBD), Singapore Indian Chamber of Commerce (SICCI) and V. Vijayasai Reddy; ,Member of Parliament – Andhra Pradesh, Chairman – Parliamentary Standing Committee on Commerce ,National General Secretary – YSR Congress Party, other panel members of the roundtable included Yasuyuki Murahashi, Chief Director-General, Japan External Trade Organization (JETRO); Arun Kumar Jagatramka, Chairman & Managing Director, GNRE Infra; Himanshu Jain, President APAC, Diversey; Jai Shankar Krishnan, Vice President – High Growth Markets, Danaher Corporation; KV Rao, Managing Director, NABCONS; Maulik Mehta, Chief Executive Officer & Executive Director, Deepak Nitrite; Nitin Vyas, Managing Director, Beumer Group; Mr Rajan Navani, Vice Chairman & Managing Director, Jetsynthesys; Dr. S. Nasim, Executive Chairman, Meinhardt Group, Singapore; Sanjiv Navangul, Managing Director, Bharat Serum and Vaccines; Sridhar Dharmarajan, Executive Vice President & Managing Director, Hexagon|MSC Software, Vikram Gupta, Founder & Managing Partner, Ivycap Ventures.