India concerned about its trade deficit with Indonesia; feels need to establish sustainable trade by diversifying the export basket

New Delhi Union Minister of Commerce & Industry and Railways of India, Piyush Goyal has raised concerns about India’s trade deficit with Indonesia and suggested that both countries work towards establishing sustainable trade by diversifying the export basket.

Goyal said this during a bilateral meeting with Indonesian Minister of Trade, Enggartiasto Lukita in New Delhi on July 9. The meeting took place on the sidelines of Troika Meeting with ASEAN Trade Ministers.

Piyush Goyal raised concerns about India’s trade deficit with Indonesia which stood at USD 10.57 billion in India’s trade deficit with Indonesia during 2018-19. He said that the balance of trade is heavily in favor of Indonesia and both countries need to work towards establishing sustainable trade by diversifying the export basket.

The Commerce & Industry minister said that there is considerable potential for expanding trade in agricultural, automobiles, engineering products, IT, pharmaceuticals, biotechnology, and healthcare sectors. With a bilateral trade of USD 21.13 billion in 2018-19, Indonesia has emerged as the second largest trading partner of India in the ASEAN region after Singapore.

Piyush Goyal highlighted India’s concern on the import quota restrictions faced by Indian auto and auto component industries in Indonesia on completely built-up units (CBU) and tyres. These restricted import quota prescribed by Indonesia for Indian vehicles in CBU condition has adversely impacted Indian exports. Long lead time is taken for regulatory certification for new vehicles also affects the launch of new products. Indonesia adopts standards for emission which is not commensurate with the global emission norms for fuel efficiency in automobiles. Further other competitors have better market access advantage over Indian automakers due to bilateral FTA arrangements. Indonesian Minister assured Piyush Goyal that he would address this gap, a ministry communique said.

Commerce and Industry Minister requested the Indonesian side to allow Indian Origin Frozen Halal Buffalo Meet (FHBM) free and directly to importers/ distributors of Indonesia through various important ports, without quotas and restrictions. The Indonesian side assured that there will be no quota restrictions from authorized exporters as long as the quality is maintained.

Commerce and Industry Minister reiterated the potential for enhanced cooperation on health and pharma sector between India and Indonesia. The Indonesian Trade Minister assured Piyush Goyal that he will take up the issue with Indonesian importers to source high quality and cost-effective pharma products from India. Indonesia has imported pharma products worth USD 990 million and India’s share in its import was only USD 75 million.

The Commerce & Industry Minister also requested the Indonesian side for more market access for India’s agricultural products like musk melon, bitter gourd, grapes, pumpkin, and milk products, which is pending with Indonesia. He further requested his Indonesian counterpart to grant Country recognition to India for export of agricultural products under the new Fresh Food of Plant Origin (FFPO) regulation of Indonesia. Indonesia’s new Fresh Food of Plant Origin (FFPO) regulation introduced from 17 February 2016 is a technical barrier which restricts exports from India.

The Indonesian side also assured India that it will facilitate the sourcing of sugar from India by reducing tariffs and regularizing standards as per India’s requirement.

The Indonesian side requested for parity on duty with Malaysian exports of refined palm oil with India where it is currently suffering 5% disadvantage. Commerce and Industry Minister assured that he will take up this issue with the concerned Ministry.

Piyush Goyal said that India is looking forward to enhanced bilateral engagement with Indonesia and requested Indonesia for holding the next India Indonesia Biennial Trade Ministers’ Forum Meeting (BTMF) at Jakarta at the earliest.