Indonesia, India Roll Out Preferential Trade Agreement

Indonesia and India have agreed to maintain their preferential trade agreement. The two countries are also committed to cooperating in trade and investment, as well as to overcoming various obstacles in the two sectors.

KOMPAS/HENDRIYO WIDI

The Minister of Trade Zulkifli Hasan and the Indonesian Ambassador to India Ina Hagniningtyas Krisnamurthi held dialogues with Indian business and industry and a number of countries in the Indonesia Country Session which is part of the 2023 CII Partnership Summit in New Delhi, India, Tuesday (14/3/2023).

NEW DELHI, KOMPAS – Indonesia and India aim to reach US$50 billion in non-oil gas and trade between the two countries by 2025. This target will be realized through a preferential trade agreement (PTA) and collaboration between business and industry players from the two countries.

The trade target was agreed by President Joko “Jokowi” Widodo and Indian Prime Minister Narendra Modi in 2019. Until 2022, total non-oil and gas trade between the two countries had reached $32.7 billion, growing 55 percent on a yearly basis.

Trade Minister Zulkifli Hasan said on Tuesday (14/3/2023) that his side would try to achieve the target through increased ties with the Indian government and businesses. Indonesia was working on drafting a PTA with the Indian government.

“This PTA will lead to trade in goods that are of interest to the two countries,” he said on the sidelines of the 2023 Confederation of Indian Industry (CII) Partnership Summit in New Delhi, India.

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Zulkifli also discussed the PTA in a meeting with Indian Trade and Industry Minister Piyush Goyal on Tuesday evening, with the two countries agreeing to begin negotiations.

The Trade Ministry’s international trade negotiations director general, Djatmiko Bris Witjaksono, added that Indonesia and India began negotiations on bilateral cooperation in trade in 2020. At the time, the two countries were committed to realizing a PTA. However, due to the Covid-19 pandemic, negotiations were delayed for around two years. Indonesia and India would resume intensive PTA negotiations this year.

This year, ASEAN and India will negotiate to review and renew this agreement.

According to Djatmiko, Indonesia and India are bound by consensus to the ASEAN-India Free Trade Area. The consensus consists of three agreements related to trade in goods (AITIGA), trade in services (AITISA) and investments (AIAOI).

The AITIGA was implemented on 10 Jan. 2010 and regulates the elimination and reduction of trade tariffs on certain goods.

“This year, ASEAN and India will negotiate to review and renew this agreement,” said Djatmiko.

He also expressed the hope that India would join the Regional Comprehensive Economic Partnership Agreement (RCEP), as both Indonesia and India would become epicenters of the global economy in the next few years.

SUMBER: KEMENTERIAN PERDAGANGAN

Trade Agreement with India

Collaboration and obstacles

In addition to a PTA, Zulkifli continued, the Trade Ministry was also encouraging collaboration between Indonesian and Indian businesses and industry players to expand bilateral trade and investment. One way was to increase cooperation between the Indonesian Chamber of Commerce and Industry (Kadin) and the CII.

The Trade Ministry would facilitate meetings between the two countries’ businesses and industry players through Business 20 (B20) meetings during India’s 2023 Group of 20 (G20) presidency. Additionally, the Trade Ministry would go on a trade mission to India with Indonesian businesspeople.

“We hope that CII member businesses will be able to participate in the trade mission to further enhance business interactions between the two countries,” Zulkifli said after meeting with CII president Sanjiv Bajaj at Taj Palace Hotel in New Delhi.

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During their meeting, Bajaj stated that the CII was committed to improving bilateral trade between the two countries. Both Indonesia and India shared the same goal, namely to benefit mutually beneficial trade. The CII also supported Indonesia’s trade mission to India.

During the Country Session forum at the 2023 CII Partnership Summit, the Indonesian delegation also spoke with businesses and industry players that were CII members as well as those from other countries. On that occasion, Zulkifli and Indonesian Ambassador to India Ina Hagniningtyas Krisnamurthi said the Indonesian government would facilitate trade and investment among businesses and industry players from the two countries.

The government also invited Indian businesses and industry players to invest in the development of the new capital city in Sepaku, North Penajam Paser regency, East Kalimantan. The government also conveyed its commitment to helping resolve barriers to trade and investment in Indonesia.

We hope that Indonesia can play a role in the production of high-quality textiles in India

During his meeting with his Indian counterpart Goyal, Zulkifli also discussed strengthening cooperation in five sectors, namely information technology, health, textiles, furniture and education and human resources. The two trade ministers also discussed several issues deemed a hindrance to increasing bilateral trade between the two countries, such as issues related to Indonesia's tire and fiber exports to India and to importing buffalo meat, automotive products, sugar and rice from India to Indonesia.

Zulkifli also asked India not to impose antidumping duties (BMAD) on viscose staple fiber (VSF), or Indonesian rayon. The raw material supported the Indian textile industry, which could grow India's global textile exports.

One company that produces Indonesian rayon is PT Asia Pacific Rayon (APR), which is interested in investing in India to develop a new generation of viscose products (lyocell), which is of better quality and more environmentally friendly.

"Through this investment, we hope that Indonesia can play a role in the production of high-quality textiles in India," said Zulkifli.

This article was translated by Kesya Adhalia.