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7 Sep 2021

International Economy

India’s economy and FDI soars ... Thai exports to India in 2021 set to surge 40% (Current Issue No.3265)


India is an interesting country. Aside from its economic growth that ranks among the highest in the world, it was the fifth-largest FDI recipient in 2020. KResearch perceives that future investments especially in e-commerce and ICT industries, and the manufacturing of technological devices like smart phones, electrical appliances/electronics and electric vehicles (EVs) will play a vital role in integrating India into the global supply chain. This would be beneficial to exporters of intermediary goods, including Thailand, a major electronic component manufacturer which has the potential to grow alongside India's manufacturing industry.  

Presently, India ranks as Thailand's 10thbiggest export market and is thus a key export destination in South Asia. Thailand's exports to India over the first seven months of 2021 grew 57.5 percent YoY, with a value of USD 4.486 billion. Although Thailand has a long-standing FTA with India, Thai exports to India amounts to only 2.9 percent of Thailand's total exports to the global market. Export growth is predominantly associated with raw materials such as copper, plastic pellets and chemicals – which are essential to meet rising production and demand in India.

KResearch assesses that India's economy will likely return to pre-COVID-19 levels thanks to the global economic recovery which will be a boon to shipments of raw materials from trade partners like Thailand which are vital to India's manufacturing industry. Thailand's exports to India throughout 2021 is expected to reach an all-time high of at least USD7.7 billion, equivalent to growth of 40 percent, YoY although Thai shipments to India may experience sluggish growth over the remainder of 2021 due to the higher base of the previous year. Going forward, if India continues to attract massive foreign direct investment, demand for intermediary goods from Thailand should also see an increase – contrary to the meager export value at present. In addition to auto parts, Thailand's electrical and electronic components are also expected to perform well in this new South Asian market.​

International Economy