India and Indonesia step up trade ties
India and Indonesia step up trade ties
India and Indonesia hold the perfect foundation for amiable trade and investment ties.
Cultural and trade relations harking back at least two thousand years have paved the way for increasing closeness in the two countries' relations. India and Indonesia possess enormous potential for growth and expansion of their economies due to their large populations and abundance of natural resources.
The next few years and the advent of the 21st century seem destined to see significant growth in bilateral trade between the two countries.
Trade and economic relations between India and Indonesia were formalized by a Trade Agreement signed in June 1978. This committed the countries to take "all appropriate measures to facilitate, strengthen, maximize and diversify trade" within the framework of their respective laws and regulations in force.
Discussions have been held over the years to strengthen commercial ties within the framework of this agreement. Other important developments include an agreement on the avoidance of double taxation effected in 1986 and a Memorandum of Understanding on agricultural cooperation signed in 1992. There are also agreements for scientific and cultural cooperation and utilization of nuclear energy for peaceful purposes.
Trade
Two-way trade relations, spurred by India's adoption of sweeping economic reforms, soared from US$102.92 million in 1988 to $485 million in 1993. Among India's important export items to Indonesia are animal feed, cotton, synthetic fiber, machinery and equipment, chemicals, tobacco, spices and building material.
Its main imports are cement, fertilizer, tin, palm oil, chemicals, glassware, coal, sponge iron, fruit and petroleum products.
Indian companies are also prominent in setting up projects in Indonesia. In the 1980s, three major projects were implemented on a turn-key basis. These included a tool room cum training center in Surabaya, East Java, set up by Hindustan Machine Tools; a sugar project in Camming, South Sulawesi, executed by Triveni Engineering Works; and a cement plant in Padang, West Sumatra, established by Project and Equipment Corporation of India and WIL.
At present the Indian Railway Construction company is working on two major fly-overs -- Matraman and Senen -- in Central Jakarta. They have also completed a railway electrification project at Bekasi and Manggarai. Telecommunications Consultants India Ltd was recently awarded a contract to set up a telecommunications network in Java and Sulawesi.
There are 14 Indian-Indonesian joint ventures in Indonesia, with direct Indian participation and financed by overseas Indians. These joint ventures are in the fields of textiles, garments and steel. The latest entrant in the Indonesian market is Essar Gujarat, which is setting up a cold roll steel mill at an estimated cost of $75 million. Joint investment by Indian companies in Indonesia is $217.5 million and India ranks 18th among the foreign countries investing in Indonesia.
These articles are written by Bruce Emond from materials supplied by the Embassy of India.