In the last few decades, Thailand has emerged as a major economic superpower in South East Asia. Backed by its robust export growth and increased consumption, the country recorded a 3.6% GDP growth in 2008. Owing to its infrastructure facilities and openness to foreign investment, Thailand has become a major investment destination for a large number of Indian SMEs.
Following the Asian financial crisis of 1997-98, the Thai government realised the importance of foreign direct investment (FDI) to boost the economy. Consequently, the government initiated efforts to promote FDI in major sectors. As part of its globalisation strategy, the Thai government entered into several trade alliances with leading economies across the world.
Important industries
Thailand is the world’s second largest tungsten producer and third-largest tin producer.[ii]
Trade ties
In the past few years, mutual trade and investment between India and Thailand have recorded a steady growth. Statistics reveal that Thailand is the 27th largest investor in India accounting for about 0.91% of India’s overall global trade.
As per data released by the Confederation of Indian Industry (CII), cumulative Indian investment in Thailand from 1991 to date is approximately US$1 billion. India is a major exporter of gems and jewellery, iron and steel, vehicles, organic chemicals, copper, cotton, pharmaceuticals, aluminium and plastics to Thailand. On the other hand, Thailand is a leading exporter of rubber, textile, chemicals and electric machinery to India.
Areas of growth
According to industry experts, SMEs in India and Thailand can explore various areas of mutual cooperation to boost trade relations. In the gems and jewellery segment, for instance, small and mid-sized Indian jewellery makers can source precious and semi-precious stones from Thailand at a relatively lower cost. In addition, sectors such as healthcare, information and communication technology (ICT) and biotech are other potential areas of growth.
In the service sector, Indian SMEs can collaborate with their Thai counterparts to develop segments such as banking, travel and tourism, human resource development (HRD) and education. Analysts further opine that small and mid-sized companies in the machine tool, automotive and automobile parts sector can leverage their capacities to tap the Thai market effectively.
Government initiatives
Government authorities in both India and Thailand are aware that to maintain strong trade ties, it is imperative to develop long-term strategies and policies that would benefit the SMEs in both countries. The India-Thai Chamber of Commerce (ITCC) has been set up to facilitate trade, investment and business opportunities for Indian and Thai SMEs. In addition, there is also an India-Thailand Joint Commission and a Joint Council (JBC) formed to address the major issues faced by the SMEs in both countries.
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Saurabh Garg
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