trade relations between india and thailand

A PROJECT REPORT ON

TRADE RELATIONS BETWEEN INDIA AND THAILAND

SUBMITTED BY

TEHSEEN HANIF ANSARI

ROLL NO-1515504

M.COM- SEM-III

(BUSINESS MANAGEMENT)

ACADEMIC YEAR: 2015-16

PROJECT GUIDE

MR.N.K.S VARAHAN

SUBMITTED TO

UNIVERSITY OF MUMBAI

MULUND COLLEGE OF COMMERCE

S.N ROAD, MULUND (WEST)

MUMBAI 400080.

DECLARATION

I, TEHSEEN HANIF ANSARI, ROLL NO 1515504, STUDENT OF MULUND COLLEGE

OF COMMERCE, S.N ROAD, MULUND (WEST), MUMBAI 400080 STUDYING IN

M.COM PART-II HEREBY DECLARE THAT I HAVE COMPLETED THE PROJECT ON

“TRADE RELATIONS BETWEEN INDIA AND THAILAND” UNDER THE GUIDANCE

OF PROJECT GUIDE PROF.MR.N.K.S VARAHAN DURING THE ACADEMIC YEAR

2015-2016.THE INFORMATION SUBMITTED IS TRUE AND ORIGINAL TO THE BEST

OF MY KNOWLEDGE.

DATE:

PLACE:

SIGNATURE:

CERTIFICATE

I, PROF.MR. N.K.S VARAHAN hereby certify that MISS TEHSEEN HANIF ANSARI,

ROLL NO.1515504 of Mulund College Of Commerce, S.N Road, Mulund (West),Mumbai-

400080 of M.Com Part-II (Business Management) has completed her project on “TRADE

RELATIONS BETWEEN INDIA AND THAILAND” during the academic year 2015-

2016.The information submitted is true and original to the best of my knowledge.

PROJECT GUIDE PRINCIPAL

COURSE CO-ORDINATOR EXTERNAL GUIDE

DATE:

ACKNOWLEDGEMENT

I, Tehseen Hanif Ansari would like to express my sincere gratitude to the principal of Mulund

College of Commerce Dr Mrs. Parvathi Venkatesh, Course Co-ordinator and our project guide

MR. N.K.S VARAHAN for providing me an opportunity to do my project work on “TRADE

RELATIONS BETWEEN INDIA AND THAILAND” Special thanks to library in charge,

which provided the necessary books and other data which acted as stepping stone in my project

and also those who have directly or indirectly helped me in project for their encouragement and

timely help.

Last but not the least, I wish to avail myself of this opportunity, to express a sense of gratitude

and love to my friends and my beloved parents for their help and support.

SIGNATURE:

DATE:

PREFACE

OBJECTIVES.

To examine the trade relations between India and Thailand.

To know the demographics of Thailand.

To examine how much trade is increasing after FTA between India and Thailand.

To identify the effects on India’s other trading partners outside the FTA.

INDEX

SR.NO TOPIC PG.NO

CHAP 1 INTRODUCTION 1

CHAP 2 INTERNATIONAL MARKETING 2-3

CHAP 3 DEMOGRAPHICS OF THAILAND 4-9

CHAP4 THAILAND-INDIA ECONOMIC

OVERVIEW

10-13

4.1 EXPORT-IMPORT ANALYSIS 14-16

4.2 RECENT DEVELOPMENTS AND SOME

IMPORTANT ISSUES IN REFERENCE TO

THAILAND

17-18

CHAP 5 CONCLUSION 19

WEBLIOGRAPHY 20

CHAP 1-INTRODUCTION

India’s economic relations with Thailand are set to undergo major changes as the Indo Thai FTA

has come into force since 9 October 2003.As such this paper aims to describe the trade relation

between India and Thailand and to study the changes outcome after the signing of FTA. Thailand

is a major developing exporting country from Asia .on the other hand, India is consolidating its

position with strong domestic and external demand The developing countries studied are making

efforts to develop their exports through different paths with direct and indirect influence of

government through innovative policies and trade liberalization programme. Thailand has aimed

to plug the gaps in the exports through a focused investment promotion scheme. India is also

making an effort to develop indigenous strategy through giving focus in R&D and tightening the

IPR regime. The study India Thailand trade assessment related to export import scenario with

respect to Free Trade Agreement focusing on overall trade performance of these two

countries .Also very less past research has tried to bring out these dimensions insights into FTAs

effect on overall trade volume performance. The paper is based on the review of the existing

literature on India Thailand Free trade agreement focusing on Indian Thailand overall trade

volume.FTA between Thailand and India has resulted in lowering of tariff of the specific

components mentioned in Early Harvest Scheme but whether it has really promoted overall trade

between the two countries remains a cause of concern. Which country has better trade effects?

The study is based on the secondary data and hence may not cover the latest trend of the

industry.

CHAP 2-INTERNATIONAL MARKETING

As technology creates leaps in communication, transportation, and financial flows, the world

continues to feel smaller and smaller. It is possible for companies and consumers to conduct

business in almost any country around the world thanks to advances in international trade.

According to the World Trade Organization, the volume of international merchandise trade

increased 33 times between 1951 and 2010.

Brands and products that originate in one country are enthusiastically accepted in others. For

example, Louis Vuitton handbags, BMWs, and Columbian coffee, all foreign products, are

symbols of status and quality in the United States – and many American brands, like Warner

Brothers motion pictures, have similar footholds overseas.

International marketing is the application of marketing principles in more than one country, by

companies overseas or across national borders. International marketing is based on an extension

of a company’s local marketing strategy, with special attention paid to marketing identification,

targeting, and decisions internationally 

According to the American Marketing Association (AMA) "international marketing is the

multinational process of planning and executing the conception, pricing, promotion and

distribution of ideas, goods, and services to create exchanges that satisfy individual and

organizational objectives."

International marketing is the export, franchising, joint venture or full direct entry of a marketing

organization into another country. This can be achieved by exporting a company's product into

another location, entry through a joint venture with another firm in the target country, or foreign

direct investment into the target country. The development of the marketing mix for that country

is then required - international marketing. It can be as straightforward as using existing

marketing strategies, mix and tools for export on the one side, to a highly complex relationship

strategy including localization, local product offerings, pricing, production and distribution with

customized promotions, offers, website, social media and leadership. Internationalization and

international marketing meets the needs of selected foreign countries where a company's value

can be exported and there is inter-firm and firm learning, optimization and efficiency in

economies of scale and scope. The firm does not need to export or enter all world markets to be

considered an international marketer.

CHAP 3-DEMOGRAPHICS OF THAILAND

Thailand, officially the Kingdom of Thailand formerly known as Siam , is a country at the centre

of the Indochinese peninsula in Mainland. It is bordered to the north by Myanmar and Laos, to the

east by Laos and Cambodia, to the south by the Gulf of Thailand and Malaysia, and to the west

by the Andaman Sea and the southern extremity of Myanmar. Its maritime boundaries

include Vietnam in the Gulf of Thailand to the southeast, and Indonesia and India on the

Andaman Sea to the southwest.

Thailand is the country in Southeast Asia most visited by tourists, and for good reason. You can

find almost anything here: thick jungle as green as can be, crystal blue waters that feel more like

a warm bath than a swim in the ocean, and food that can curl your nose hairs while dancing

across your taste buds. Exotic, yet safe; cheap, yet equipped with every modern amenity you

need, there is something for every interest and every price bracket, from beach front backpacker

bungalows to some of the best luxury hotels in the world. And despite the heavy flow of tourism,

Thailand retains its quintessential Thai-ness, with a culture and history all its own and a carefree

people famed for their smiles and their fun-seeking sanuk lifestyle. Many travellers come to

Thailand and extend their stay well beyond their original plans and others never find a reason to

leave. Whatever your cup of tea, they know how to make it in Thailand.

POPULATION

Thailand's population (1950-2015).

The 2014 population of Thailand is estimated to be 67,200,000.

Thailand's population is mostly rural. It is concentrated in the rice-growing areas of the central,

northeastern, and northern regions. As Thailand continues to industrialize, its urban population –

45.7% (in 2010, according to NESDB) of the total population, principally in theBangkok area –

is growing. Accurate statistics are difficult to arrive at, as millions of Thai migrate from rural

areas to Bangkok, then return to their place of origin to help with seasonal field work. Officially

they have rural residency, but spend most of the year in urban areas.

Thailand's highly successful government-sponsored family planning program has resulted in a

dramatic decline in population growth from 3.1% in 1960 to around 0.4% today.The World

Bank forecasts a contraction of the population in ten years time. In 1970, an average of 5.7

people lived in a Thai household. At the time of the 2010 census, the figure was down to 3.2.

Even though Thailand has one of the best social security systems in Asia, the increasing

population of elderly people is a challenge for the country.

Life expectancy has risen, a positive reflection of Thailand's efforts in executing effective public

health policies. The Thai AIDS epidemic had a major impact on the Thai population. Today,

over 700,000 Thai are HIV or AIDS positive, approximately 2% of adult men and 1.5% of adult

women. Every year, 30,000–50,000 Thai die from HIV or AIDS-related causes. Ninety percent

of them are ages 20–24, the youngest range of the workforce. The situation could have been

worse; an aggressive public education campaign in the early 1990s reduced the number of new

HIV infections from 150,000 to 25,000 annually.

Entirely preventable is the leading cause of death among the age cohort under 15 years of age:

drowning. A study by the Child Safety Promotion and Injury Prevention Centre of Ramathibodi

Hospital revealed that more than 1,400 youths under 15 years old died from drowning each year,

or an average four deaths a day, becoming the top cause of deaths of children, even exceeding

that of motorbike deaths. Thailand'd Disease Control Department estimates that only 23% of

Thai children under 15 can swim.

LANGUAGES.

Thailand is dominated by languages of the Southwestern Tai family. Karen languages are spoken along 

the border with Burma, Khmer is spoken near Cambodia (and previously throughout central Thailand), 

andMalay in the south near Malaysia.

The Thai hill tribes speak numerous small languages, many Chinese retain varieties of Chinese,

and there are half a dozen sign languages. The Ethnologue reports 73 living languages are used

in Thailand.

RELIGION

Theravada Buddhism is the official religion of Thailand. 93.6% are estimated to be Buddhist,

4.9% Muslim, 1.2% Christian, 0.2% other and 0.1% have no religion.

In addition to Malay and Yawi speaking Thai and other southerners who are Muslim, the

Muslim Cham of Cambodia in recent years began a large scale influx into Thailand. The

government permits religious diversity, and other major religions are represented, though there is

much social tension, especially in the Muslim South. Spirit worship and animism are widely

practiced.

AGE STRUCTURE

0-14 years: 17.6% (male 6,117,993/female 5,827,981)

15-24 years: 15% (male 5,194,332/female 4,999,669)

25-54 years: 46.9% (male 15,685,882/female 16,097,245)

55-64 years: 10.9% (male 3,468,620/female 3,893,925)

65 years and over: 9.5% (male 2,830,418/female 3,625,336) (2014 est.)

DEPENDENCY RATIOS

Total dependency ratio: 38.6 %

Youth dependency ratio: 24.7 %

Elderly dependency ratio: 13.9 %

Potential support ratio: 7.2 (2014 est.)

POPULATION GROWTH RATE

0.35% (2014 est.)

BIRTH RATE 11.26 births/1,000 population (2014 est.)

DEATH RATE 7.72 deaths/1,000 population (2014 est.)

NET MIGRATION RATE 0 migrant(s)/1,000 population (2014 est.)

URBANIZATION

Urban population: 34.1% of total population (2011)

Rate of urbanization: 1.6% annual rate of change (2010-15 est.)

MAJOR CITIES -POPULATION

BANGKOK (capital) 8.426 million; Samut Prakan 1.212 million (2011)

SEX RATIO

At birth: 1.05 male(s)/female

0-14 years: 1.05 male(s)/female

15-24 years: 1.04 male(s)/female

25-54 years: 0.97 male(s)/female

55-64 years: 0.97 male(s)/female

65 years and over: 0.82 male(s)/female

Total population: 0.98 male(s)/female (2014 est.)

INFANT MORTALITY RATE

Total: 9.86 deaths/1,000 live births

Male: 10.82 deaths/1,000 live births

Female: 8.85 deaths/1,000 live births (2014 est.)

LIFE EXPECTANCY AT BIRTH

Total population: 74.18 years

Male: 71 years

Female: 77.54 years (2014 est.)

NATIONALITY

Thai (singular and plural)

LITERACY

Definition: age 15 and over can read and write

Total population: 92.6%

Male: 94.9%

Female: 90.5% (2002 est.)

CHAP 4-THAI – INDIA ECONOMIC OVERVIEW

India is considered as a Thailand’s prominent partner in South Asia in many aspects. Since both

countries have established diplomatic relations for over 65 years, the relationship grew from

strength to strength especially in terms of bilateral trade which continuously increased.

Bilateral trade of Thai-India has grown significantly and has multiplied six times since 2000 to

reach 8.67 billion USD in 2012 and expected that it will continue to grow as our free trade

agreements which provide us lower tariffs and trade barriers. While the Trade figure in 2012

includes Thai exports worth 5.47 (5.7% growth) billion USD and Thai imports worth 3.19 (5.9%

growth) billion USD. During the visiting of Thai Prime Minister to India in January 2013, the

target of 13.2 billion USD bilateral trade among both countries in 2014 was set in Delhi.

Major items of Thai exports to India (Million US$)

Product 2011 20122012 (Jan.-Mar.)

2013 (Jan.-Mar.)

%Growth

%Proportion

Jewellery including silver bars and gold

655.1 476.8 155.4 207.8 33.72% 19.81%

Iron, steel and products 66.8 156.9 28.1 175.7 525.27% 16.75%

Vegetables and vegetable products 246.5 405.7 114.8 168.1 46.43% 16.03%

Machinery and parts 280 397.2 82.5 86.3 4.61% 8.23%

Chemicals 312.5 289.7 66.4 69 3.92% 6.58%

Parts and accessories of vehicles 136.5 223 45.4 61.1 34.58% 5.83%

Medicinal and pharmaceutical products

139.7 137.9 35.7 38.6 8.12% 3.68%

Yarn and fibers 106.5 134.7 46.9 26.2 -44.14% 2.50%

Buses and trucks 55.8 48.4 4.2 26.1 521.43% 2.49%

Other metal ores, metal waste scrap, and products

195.7 104.6 29.5 19.3 -34.58% 1.84%

Other 825 823.2 201.3 170.8 -15.15% 16.28%

Total3,020.10

3,198.20

810.3 1,048.90 29.45% 100.00%

Major Items of Thai imports from India (Million US$)

Product 2011 20122012 (Jan.-Mar.)

2013 (Jan.-Mar.)

%Growth %Proportion

Iron and steel and their products 195.2 639.9 45.6 179.3 293.20% 12.84%

Precious stones and jewellery 442.1 388 89 136.7 53.60% 9.79%

Polymers of ethylene, propylene, etc in primary forms

487.9 461.5 119.6 125.6 5.02% 9.00%

Chemical products 734.3 582 160.1 108.4 -32.29% 7.76%

Spark-ignition reciprocating internal combustion piston

288.8 381 90.4 105.4 16.59% 7.55%

Machinery and parts thereof 258.4 271.1 70.2 74.6 6.27% 5.34%

Motor cars, parts and accessories 267.1 297.9 80.2 71.6 -10.72% 5.13%

Air conditioning machine and parts thereof

158.7 264.3 72.2 71.6 -0.83% 5.13%

Automatic data processing machines and parts thereof

206.9 188.8 48 41.1 -14.38% 2.94%

Radio-broadcast receivers, television receiver and parts

85.5 149.2 34 35.4 4.12% 2.54%

Other 2,056.40 1,852.90 554.7 446.7 -19.47% 31.99%

Total 5,181.50 5,476.70 1,364.10 1,396.20 2.35% 100.00%

FREE TRADE AGREEMENT

1. India – Thailand Free Trade Agreement

The Framework Agreement for Establishing the Free Trade Agreement between India and

Thailand had been done in Bangkok on October 2003 and has been entered into force on January

2004. Thailand and India have agreed to reduce tariffs between items to accelerate tax cuts

(Early Harvest Scheme) for 83 items. These 83 items will be having a tax rate of 0% since

September 2006. Thailand-India are still negotiating further liberalization to cover the rest of the

items.

2. India-Asean Free Trade Agreement.

The trade agreement between India and ASEAN has already come into effect with the exception

of Indonesia. Starting from January 2010, the tariff liberalization under the India-ASEAN FTA

was to gradually cover 75% of the two-way trade between India and the ASEAN member

countries. The FTA will lead to the elimination of tariffs on some 4,000 products including

electronics, chemicals, machinery and textiles. Of these 4,000 products, 3,200 products will have

duties reduced by the end of 2013, while duties on the remaining 800 products will be lowered to

lowered to zero or almost zero by the end of 2016.

India has recently inked a free trade agreement (FTA) with Thailand for setting up of a free trade

area covering goods, services and investment in 10 years. The Indo-Thai FTA covers as many as

84 items and several areas in the first phase including services, investment, economic

cooperation and goods like food items, tourism, auto parts, electronic goods. As per the ‘Early

harvest scheme (EHS)’ under the agreement, a common list of items for exchange of tariff

concession at 6-digit level and tariff on these identified items is slated to be phased out by March

1, 2006. As per agreement, negotiations on goods will begin from January 2004 and will be

concluded in March 2005 and the FTA for zero duty imports will be put into effect by 2010.

Similarly negotiations on investment would start in January 2004 and is expected to be

completed within two years. Currently, discussions are continuing on the framework of ‘Rules of

Origin’.

4.1-EXPORT IMPORT ANALYSIS

India is one of Thailand’s fastest growing trade partners among major economies. With the

initiation of FTA, there has been a significant growth in trade flows between the two countries.

India was Thailand’s 17th largest trading partner and the 11th largest export destination in 2010.

Since the Thailand-India Free Trade Agreement Framework was concluded in October 2004,

bilateral trade between them has tripled. However, The amount of India’s total exports to

Thailand, in 2004 — 05, amounted to US $ 0.90 billion while the corresponding value of India’s

imports from Thailand was US .$ 0.87 billion. By 2008 — 09, the exports have crossed over US

$ 1.9 billion and imports over US $ 2.7 billion. Following Tables and Chart show the recent

trend in Indo — Thailand trade. Thus, an overall trend in the growth of exports and imports

between India and Thailand shows that the growth in both exports and imports has been at faster

rate after the framework agreement was signed between the two nations.

India Exports to Thailand (In US $ millions)

Year India’s Export Global Export % Share % Growth

2004 831.68 63842.55 1.30 16.94

2005 901.39 83535.94 1.07 8.38

2006 1075.31 103090.53 1.04 19.29

2007 1445.54 126414.05 1.14 34.43

2008 1810.87 163132.18 1.11 25.27

2009 1938.31 185295.36 1.04 7.04

2010 1740.16 178751.43 0.97 -10.22

2011 2792.80 251135.89 1.11 60.49

India’s Import with Thailand

Year India’s Import Global Import % Share % Growth

2004 609.65 78149.11 0.77 6.75

2005 865.88 111517.43 0.77 42.17

2006 1211.58 149165.73 0.81 39.93

2007 1747.75 185735.24 0.94 44.25

2008 2300.93 251654.01 0.91 31.65

2009 2703.82 303696.31 0.89 17.51

2010 2931.52 288372.88 1.01 8.42

2011 4272.09 369769.13 1.15 45.73

Though it is seen that the present level of India — Thailand trade is low, it is increasing over

time. India’s total trade with Thailand has increased especially since 2003 — 04 during which

the framework agreement for a free trade agreement between the two countries was signed.

Imports from Thailand have been increasing at a faster rate than the increase in exports. India has

enjoyed a trade surplus since 2004— 05 after which imports have been more predominant.

Thailand’s import demands are high and India has great capacity to meet export supply for a

large number of commodities of Thailand’s import demands. Thailand’s Ratio of exports to GDP

is 58.8 and Ratio of imports to GDP is 61.5. Thailand also experienced the severe financial crisis

in late nineties. Its economic growth fell in negative to (-) 10.5% in 1998 from (-) 1.4% in 1997;

the economic growth recovered to 4.4% in 1999 and 4.6% in 2000.6.

Fig. Showing the India’s export and import with Thailand. During 2003-04 export increased

from US $ 831.68 million to 2792.80 in 2010-11 .This was largely due to trade openness,

reduction in tariff and more openness to foreign investment and FTA agreement between the two

countries. However, on the import side, during 2003-04 the import increases from US $ 609.65

million to 4272.09 million I US $ n 2010-11.

4.2-RECENT DEVELOPMENT AND SOME IMPORTANT

ISSUES IN REFERENCE TO THAILAND.

India and Thailand have already cut duties on 82 products, including fruits, vegetables, wheat,

diamonds and some metals, under a framework agreement that came into operation in September

2004. India and Thailand are aiming to abolish duties on goods traded between the two countries

by 2010. Thailand, which used to run a deficit in its trade with India, has registered a US $ 140

million trade surplus in 2005 — 06, even before tariffs on 82 items covered under the scheme

were brought to zero. According to government sources, Thailand wants greater market access in

natural rubber, being a major exporter of the product. However, natural rubber is expected to be

a part of India‟s negative list. In the negotiations of goods, India has agreed to eliminate tariff on

more than 4000 products in a phased manner, while 500 others will be in the sensitive list, which

will see partial duty cuts, over a period of time. Nearly 500 other items in the negative list will

not be subject to any tariff cut, so as to protect the interests of the domestic industry.

Overall, the balance of trade has tilted in favor of Thailand with India’s exports growing at an

average of 26% for the past three years since 2004 — 05 till 2007 — 08 and Indian imports

growing at 38% during this period. India needs to improve the quality of infrastructure facilities

with a view to become more competitive vis-a-vis imports from Thailand. High rates of taxes

and duties, low labor. Productivity and procedural complexities are impacting the

competitiveness of Indian industries. Indian business can also take the advantage of Thailand’s

liberal attitude towards foreign investment as the Thai government recognizes the important

contribution of foreign investment to the domestic economy. Thailand has sought more Indian

investment in IT and pharmaceuticals — the two areas in which India has proven expertise. India

and Thailand have injected a new vigor into their bilateral trade in recent years, with bilateral

trade increasing six-fold over the past decade. The current bilateral trade figure of $7.5 billion is

itself set to double by 2015.

CHAP 5-CONCLUSION

This paper indicates that the pattern of trade between India and Thailand has shown sign of a

change after signing the FTA. At present, India’s imports from world are US$ 50434 million as

compared to Thailand’s imports of around US$ 56915 million .Both these countries have

captured a Small market of each other. There is lot of scope that exploring FTA will lead to

significant increase in bilateral trade between India and Thailand. It should be remembered that

the present level of India-Thailand trade is low, but is increasing overtime. This increase has

been noticed particularly in India’s imports from Thailand. Consequently, the trade gap, which

has traditionally been heavily in India’s favor, has reduced considerably. Thailand’s import

demands are quite high and India will be able to meet export supply for a large number of

commodities of Thailand’s import demands. The present level of Thailand’s imports from India

is small; hence India will be able to capture a large portion of Thailand’s market for these

commodities. Thailand is relatively a more open economy than India.

To use a common expression, we believe that India is now, more than anytime in modern

history, poised to take its rightful place in the global trade arena. The effect on Asia and the

world will be immense once the India market fully opens up. The free trade frameworks with the

ASEAN region and Thailand are first steps among certainly many other steps, towards a more

global integration. Thailand stands to benefit from the free trade framework, and we believe that

with our proximity to India, and the long history of cultural exchanges, Thailand can also serve

as a one of the gateways to India.

WEBLIOGRAPHY

http://www.ejsit.org/journal2/journal18.pdf

http://www.mea.gov.in/Portal/ForeignRelation/Thailand-February-2012.pdf

http://www.indexmundi.com/thailand/demographics_profile.html

http://www.marketing-schools.org/types-of-marketing/international-

marketing.html