US, China and India trade imbalances an opportunity for Thailand

With President-elect Donald Trump’s return to the White House in January likely to intensify global trade wars, Thailand would do well to find ways to increase its trade with India, according to Att Pisalvanich, advisor to Intelligent Research Consultant (IRC) Co., Ltd. India, he added, is playing an increasingly interesting role on the global stage, so it is important to monitor how the sub-continent is positioning itself amid these ongoing trade wars and geopolitical conflicts.

India now has the largest population in the world, with 1.42 billion people in 2023, compared to China’s 1.41 billion. This makes India a larger consumer market than China.

India’s international trade involves key markets. In terms of India-China trade, Att noted that Chinese exports to India have been growing annually, from $50 billion in 2014 to $110 billion in 2023. Indian exports to China have also slightly increased, from $16 billion in 2014 to $18 billion in 2023. India currently has a $90 billion trade deficit with China, prompting measures under the Atmanirbhar Bharat (Self-Reliant India) policy to reduce dependency on Chinese goods. These measures include tariff increases on Chinese imports, which China has reciprocated. Border disputes in areas like the Galwan Valley are creating mutual distrust, further complicating trade relations.

US exports to India have also grown, doubling from $20 billion in 2011 to $40 billion in 2023, with key products including crude oil, aircraft parts, machinery and soybeans. Indian exports to the US have risen from $46 billion to $90 billion, resulting in a US trade deficit of $50 billion with India. Ongoing tariff increases on Chinese goods by the US aim to reduce its trade deficit with China, raising questions about potential shifts in trade dynamics when Trump returns to office.

On Thailand-India trade, Att reported that in 2023, Thailand exported goods worth $11.14 billion to India, accounting for 4% of Thailand’s total exports, while importing $7.86 billion from India, yielding a trade surplus of $3 billion. Key exports included chemicals, plastic pellets, automotive products and parts, gems and jewellery, steel, machinery, and air conditioners.

But despite India’s vast market, exporting to India, particularly agricultural products, is challenging due to six key factors

The first is the high price of Thai fruits. India protects its agricultural products and farmers, who make up 45% of the population. As a result, Thai agricultural exports cannot compete with locally produced items such as mangoes, bananas, pomegranates, guavas, oranges, papayas, watermelons, jackfruit, pomelos, apples, mangosteens, toddy palm, starfruit, and lychees.

The best opportunities for Thailand lie in exporting products like sweet tamarind and other items that India does not produce. However, due to high transportation costs and reduced freshness, Thai fruits are mainly sold in supermarkets at significantly higher prices.

Most Indian agricultural goods are sold in wholesale and retail markets. Thai products are not widely available in these local markets, making it difficult to reach Indian consumers.

There is also strong competition in palm oil and rubber, with India primarily importing palm oil from Indonesia and Malaysia, while Thai rubber competes with products from Indonesia and Vietnam.

Imported goods must meet rigorous standards set by the Bureau of Indian Standards (BIS) and the Food Safety and Standards Authority of India (FSSAI). Indian importers require these certifications to be visibly marked on products.

High distribution costs are another factor. Poor road infrastructure in India raises distribution costs, limiting Thai products from reaching major cities.

And although Thailand organises trade fairs and business-matching events, they are short-term and fail to sustain awareness of Thai products among Indian consumers. Moreover, these activities are never held in local markets, further restricting exposure.

“India’s growing population and rapid economic expansion are increasing demand for Thai products, presenting opportunities for exporters. However, competition from ASEAN countries must be carefully considered,” Att said.