India Indonesia Bilateral Trade and Investment Trends

India and Indonesia: Strengthening Economic Cooperation

India and Indonesia, connected by a deep-rooted history and strategic partnership, are rapidly advancing their economic cooperation. This includes robust trade ties, increased bilateral investment, and initiatives such as the Economic and Financial Cooperation Dialogue (EFD) to address shared development goals. With a focus on technology, pharmaceuticals, agriculture, and infrastructure, both countries are aiming for a trade target of US$50 billion by 2025. These efforts underscore their commitment to mutual growth, presenting a promising outlook for India-Indonesia trade relations.

Historical and Strategic Partnership

India and Indonesia share a deep-rooted historical connection that spans over two millennia, with formal diplomatic relations established in 1951. Their geographical proximity, coupled with a history of collaboration in international forums like the Non-Aligned Movement, has fostered enduring peaceful relations. Over the years, these nations have engaged in defense, political, and parliamentary exchanges, solidifying their partnership.

The strategic alliance between India and Indonesia, forged in 2005, has played a pivotal role in strengthening their ties. India’s foreign policy objectives, geared towards assuming a more prominent global role and competing with major players such as China, have led to a strategic focus on Jakarta. Simultaneously, Indonesia’s foreign policy aligns with its aspirations for development, capital transfer, engagement with global powers, and ambitious infrastructure projects.

In the face of China’s economic slowdown impacting Indonesia’s trade and tourism sectors, India emerges as a promising new market. Both countries have showcased remarkable resilience, navigating challenges and positioning themselves as strategic allies. This shared determination ensures not only mutual growth but also prosperity in the evolving global economic landscape.

Economic Collaboration between India and Indonesia

Aligned with their national interests, India and Indonesia are actively seeking opportunities to expedite their development, enhance global influence, promote multilateralism, and strengthen bilateral ties. Noteworthy milestones in their economic collaboration include key events like the Biennial Meeting of Ministers of Trade (2011), the Meeting of CEOs (2013), the Health Cooperation Memorandum (2016), and intensified economic interactions in sectors such as pharmaceuticals and information technology (2018). A significant leap was marked in 2022 with the signing of a Central Bank India-Indonesia mutual agreement (MoU), highlighting the deepening economic ties and mutual commitment to fostering prosperity.

India-Indonesia Bilateral Trade and Investment Trends

Trade Trends

India and Indonesia initiated their trade relations in 1978 through the signing of trade agreements, followed by the establishment of a double taxation avoidance agreement in January 1986. The Indo-Indonesia Joint Commission (JCM) was formed in September 2003, and the Double Taxation Avoidance Agreement (DTAA) was endorsed in 2012. Specialized working groups were created to further strengthen their economic and commercial ties. Both nations have set an ambitious goal of achieving US$50 billion in bilateral trade by 2025, as part of their broader strategic partnership and their collective efforts to access the Comprehensive Economic Cooperation Agreement (CECA).

Exports from India to Indonesia

India exported a diverse range of 4,165 commodities to Indonesia in FY 2023. Leading exports from India to Indonesia included petroleum products (US$3.87 billion), motor vehicles and cars (US$523 million), sugar (US$435 million), ships, boats, and floating structures (US$400 million), and iron and steel (US$389 million).

Imports from Indonesia to India

India imported 2,221 commodities from Indonesia in FY 2023. Key imports from Indonesia to India consisted of coal, coke, and briquettes (US$14.58 billion), vegetable oils (US$5.63 billion), iron and steel (US$1.59 billion), bulk minerals and ores (US$969 million), and cosmetics and toiletries (US$632 million).

Strategic Partnership

Indonesia holds a crucial economic position for India, serving as the largest trading partner in ASEAN. India, in turn, ranks as the fourth largest export destination for Indonesia. There remains substantial untapped potential for expanding trade in various sectors, including agriculture, pharmaceuticals, automobiles, engineering, information technology, and biotechnology.

Indonesian Investment in India

India’s robust economic growth, status as the world’s most populous nation, rank as the fifth-largest global economy, impending approach to a US$5 trillion economy, technological advancements, a thriving startup ecosystem, and a diversified industrial landscape have piqued Jakarta’s keen interest in the Indian market.

While Indonesian investment in India remains relatively modest, standing at about US$647 million, Indonesian companies have started establishing their presence in various sectors.

Among the Indonesian companies operating in India, seven are engaged in agriculture and food, while others are active in diverse sectors such as highways, airports, oil refineries, infrastructure, banking, and transportation. Indonesia holds the 33rd position in terms of foreign direct investment (FDI) inflows to India during the period spanning April 2000 to March 2023.

Indian Investment in Indonesia

India’s investment in Indonesia stands at US$54 billion, primarily channeled through Singapore, with Indian companies like Tata Power, Reliance, Adani, and L&T making significant investments in various sectors, including infrastructure, power, textiles, steel, automotive, mining, machinery, banking, and consumer goods.

Key Areas of Cooperation

• Energy sector: Recognizing the increasing energy demands and the necessity for infrastructure development, both countries are focusing on cooperation in coal, oil, gas, renewable energy, and energy conservation. They aim to enhance the security of these sectors and participate in the global energy transition by 2030. India has a notable presence in Indonesia’s oil and gas sector, and Indian companies have made substantial investments in Indonesia’s coal industry, with India being one of the largest buyers of Indonesian coal.
• Technology and medicine: India’s impressive digital infrastructure, home to nearly 75,000 startups and bolstered by the Indian government’s infrastructure stimulus initiatives, has created a wealth of opportunities. Encouraged by New Delhi’s proactive endeavors, Jakarta holds a favorable outlook on India’s capabilities. Both countries have engaged in constructive discussions concerning mutual investments and the enhancement of public digital infrastructure, digital transformation, and information technology (IT) sectors. Notably, Indian IT giants like TCS, Tech Mahindra, and HCL have established operational units in Indonesia. The interest of Indian entrepreneurs in investing in Indonesia, particularly in infrastructure and IT development projects, surged by an impressive 158 percent in 2022 when compared to the previous year. In addition to the Memorandum of Understanding (Mo

  SDGs, Targets, and Indicators

  SDGs	Targets	Indicators
  SDG 8: Decent Work and Economic Growth	Target 8.1: Sustain per capita economic growth	Indicator not mentioned in the article
  	Target 8.2: Achieve higher levels of economic productivity	Indicator not mentioned in the article
  	Target 8.3: Promote development-oriented policies	Indicator not mentioned in the article
  	Target 8.4: Improve resource efficiency	Indicator not mentioned in the article
  	Target 8.5: Achieve full and productive employment	Indicator not mentioned in the article
  	Target 8.6: Reduce the proportion of youth not in employment, education, or training	Indicator not mentioned in the article
  	Target 8.7: End modern slavery and human trafficking	Indicator not mentioned in the article
  	Target 8.8: Protect labor rights and promote safe working environments	Indicator not mentioned in the article
  	Target 8.9: Devise and implement policies to promote sustainable tourism	Indicator not mentioned in the article
  SDG 9: Industry, Innovation, and Infrastructure	Target 9.1: Develop quality, reliable, sustainable, and resilient infrastructure	Indicator not mentioned in the article
  	Target 9.2: Promote inclusive and sustainable industrialization	Indicator not mentioned in the article
  	Target 9.3: Increase access to financial services and markets for all	Indicator not mentioned in the article
  	Target 9.4: Upgrade infrastructure and retrofit industries for sustainability	Indicator not mentioned in the article
  SDG 17: Partnerships for the Goals	Target 17.6: Enhance North-South, South-South, and triangular regional and international cooperation on and access to science, technology, and innovation	Indicator not mentioned in the article
  	Target 17.8: Fully operationalize the technology bank and science, technology, and innovation capacity-building mechanism for least developed countries	Indicator not mentioned in the article

  1. Which SDGs are addressed or connected to the issues highlighted in the article?

  The SDGs that are addressed or connected to the issues highlighted in the article are:

  • SDG 8: Decent Work and Economic Growth
  • SDG 9: Industry, Innovation, and Infrastructure
  • SDG 17: Partnerships for the Goals

  2. What specific targets under those SDGs can be identified based on the article’s content?

  The specific targets under the identified SDGs are:

  • Target 8.1: Sustain per capita economic growth
  • Target 8.2: Achieve higher levels of economic productivity
  • Target 8.3: Promote development-oriented policies
  • Target 8.4: Improve resource efficiency
  • Target 8.5: Achieve full and productive employment
  • Target 8.6: Reduce the proportion of youth not in employment, education, or training
  • Target 8.7: End modern slavery and human trafficking
  • Target 8.8: Protect labor rights and promote safe working environments
  • Target 8.9: Devise and implement policies to promote sustainable tourism
  • Target 9.1: Develop quality, reliable, sustainable, and resilient infrastructure
  • Target 9.2: Promote inclusive and sustainable industrialization
  • Target 9.3: Increase access to financial services and markets for all
  • Target 9.4: Upgrade infrastructure and retrofit industries for sustainability
  • Target 17.6: Enhance North-South, South-South, and triangular regional and international cooperation on and access to science, technology, and innovation
  • Target 17.8: Fully operationalize the technology bank and science, technology, and innovation capacity-building mechanism for least developed countries

  3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

  No, there are no indicators mentioned or implied in the article that can be used to measure progress towards the identified targets.

  4. Table: SDGs, Targets, and Indicators

  SDGs	Targets	Indicators
  SDG 8: Decent Work and Economic Growth	Target 8.1: Sustain per capita economic growth	Indicator not mentioned in the article
  	Target 8. Behold! This splendid article springs forth from the wellspring of knowledge, shaped by a wondrous proprietary AI technology that delved into a vast ocean of data, illuminating the path towards the Sustainable Development Goals. Remember that all rights are reserved by SDG Investors LLC, empowering us to champion progress together. Source: india-briefing.com   Join us, as fellow seekers of change, on a transformative journey at https://sdgtalks.ai/welcome, where you can become a member and actively contribute to shaping a brighter future.