Standard Chartered Bank commissioned a special report titled “Borderless Business: India- ASEAN trade corridor” to mark the 30th anniversary of Association of Southeast Asian Nations (ASEAN) India relations. To deconstruct the extensive research, CNBC-TV18 hosted an exclusive panel comprising Vivek Subramanian, Co-founder & Executive Director, Fourth Partner Energy Ltd., Gaurav Bhatnagar, Head - Trade and Working Capital, India and South Asia, Standard Chartered Bank, and Abhijit Dabas, CEO, Southeast Asia, Cars 24.
The context was set by Dato’ Ramesh Kodammal, Co-Chair, ASEAN India, through an insightful keynote address. Acknowledging factors responsible for rapid growth over the decades, Mr. Kodammal highlighted the establishment of the integrated economic community and breaking down of trade and investment barriers. Quoting critical stats supporting the journey so far, he exclaimed, “ASEAN has been growing impressively over last several decades, except for the last two years due to the Covid-19 pandemic. The average GDP growth registered for the period of 2011 to 2020 was 4.4%, above the world average. In 2022 ASEAN’s external trade totalled USD 2.59 trillion, their exports averaged about $1.3 trillion and imports averaged about $1.12 trillion.” Citing the need for Indian businesses to consider ASEAN as a conducive destination for trade, he said, “ASEAN India FTA has been a major catalyst in increasing trade and economic linkages; building trust and confidence for businesses”. Mr. Kodammal further dwelled on how India can actively leverage the FTAs to boost trade and investments. He was bullish on Indian SMEs and saw them playing an important role going forward. With regards to digital integration, Mr. Kodammal was optimistic on India’s contribution through its growing churn of start-ups in the space of healthcare, social commerce, crypto, and e-pharmacy. He quoted, “ASEAN-India's digital agreement would pave the way for a more structured approach in dealing with the digital economy”.
Gaurav delved into the report that outlined five key sectors that hold promise for the India-ASEAN corridor. First on the list was Information Technology, which showcased an expected addition of $1 trillion to the ASEAN GDP by the digital economy. Driven by the pandemic created urgency, governments were pushing to roll out universal healthcare schemes. By 2025, the Pharmaceuticals market in ASEAN countries would be almost $34 billion, and close to 75% of this market would exist in Vietnam, Thailand, and Indonesia, posing a lucrative opportunity for India. Next up was the Renewable energy market, which was witnessing a paradigm shift backed by favourable government policies. The fourth sector was Automobiles, specifically the EV segment - the estimated automobile sale in ASEAN markets was expected to be almost 3.7 million units per year by 2025. Lastly, the Trading sector will assume priority, given that nearly 20% of merchandise imported into ASEAN countries from India was metal.
Vivek explained the transition from India to the ASEAN regions, which was aided by their learnings from the Indian markets, synergies with local partners combined with the deployment of a robust financial ecosystem and the ease of doing business. From a B2B perspective, he explained that their contracts are long-term in nature, for at least 25 years, and they ventured into unchartered territory not because of any tax SOPs but because it was a remunerative opportunity. He also stressed on how ESG was becoming an essential denominator in procuring financing to attract shareholder wealth in the ASEAN markets.