India’s economy grew at a record rate of 20.1%YoY in the second quarter of 2021 despite facing severe Delta Variant COVID-19 outbreak. Aside from this, India was the fifth-largest FDI recipient in 2020. These data reflect that India is stepping up to play a role in world’s production, as it becomes a large market with 1.3 billion population and wages as low as USD2 per day. KResearch perceives that the future FDI 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 Thailand, a major electronic component manufacturer as well.
Presently, India ranks as Thailand’s tenth biggest 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%YoY, with a value of USD4.486 billion. Although Thailand has a long-standing FTA with India, Thai exports to India amounts to only 2.9% 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 consumption demand in India.
KResearch assesses that India’s economy will likely return to pre-COVID-19 levels thanks to the global economic recovery, plus 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%YoY. Going forward, if India continues to attract massive foreign direct investment, demand for intermediary goods from Thailand should also see an increase, especially electrical and electronic components, and auto parts.
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