INDIA, long considered a sleeping economic giant, is now undoubtedly cementing its position as among the world’s major economies. As of the fourth quarter of 2016, it enjoyed the distinction of being the world’s fastest-growing major economy, with growth rates averaging over 7 percent.
Undoubtedly, India has become an attractive export market with balance of trade skewing sharply to the advantage of its major partners. The Philippines, also one of the world’s consistently fastest-growing economies, lags behind other countries that trade with India. India is ranked as the Philippines’s 20th trading partner with balance of trade sharply in India’s favor, at 75 percent to 25 percent. This only means trade opportunities for India and the Philippines are vast and for the taking.
Fourteen of the top Indian companies are based in the Philippines as their secondary location and global-service delivery hub, next only to India. These Indian multinational companies are strategically colocated in the Philippines to take advantage of the country’s footprint in major markets. Globally recognized brands in the IT and BPM services sector, such as Tata Consultancy Services, Mahindra Tech, Infosys, among others, have led the way for other smaller Indian IT and business-process outsourcing companies to locate in the Philippines following their highly successful colocation strategies in the country to add value to their global-service value chains.
Without much government intervention, the Philippines has also become a fast-emerging destination for Indian students looking to study abroad, specifically those pursuing medicine, health sciences, aeronautics, Engineering and other related fields. Recently, two India-based auto-manufacturing companies also invested in assembly plants in the Philippines.
The Philippine Trade and Investment Center (PTIC) in New Delhi identified and works toward several high-priority focus sectors and strategies for trade and investment promotion in India.
First among these priority strategies is to encourage second-tier Indian IT-BPM companies to locate in the Philippines as the secondary global- delivery hub and to bring them to the Philippines’s Next Wave Cities.
Second, PTIC New Delhi hopes to help the national government to develop India as a major market for Philippine electronics and semiconductor exports, as India’s 1.3 billion population, constant modernization and market trends open new and important opportunities for the Philippines to supply top-quality electronics and semi-conductors to the Indian subcontinent, particularly in consumer electronics and components for automobiles, appliances, gadgets and machinery.
The Philippine electronics and semiconductors industry is one of the Philippines’s most lucrative industries capable of supplying products that are globally competitive and sought after.
Third, PTIC recommends for a national strategy to develop the Philippine education sector, as a powerhouse destination for more Indian students wishing to study abroad to choose the Philippines, which has a very high potential to be another major GDP contributor to the Philippine economy.
Other high-potential opportunities lie in the Philippines’s high-value and high-innovation products, such as high-end furniture and home accessories.
Mumbai, India’s business and financial capital, is home to 45,000 millionaires and 28 billionaires, which makes India a very lucrative target market indeed.
India’s $34-billion automotive and components industry offers lucrative potential, especially to the growing attractiveness of the Philippine market and ready access to the 622 million people in the Asean single market. India’s auto-industry players and international players based in India are also excellent sources of investments.
India offers expansive opportunities for the creative-services sector. Our artistry, design and innovation are highly sought after and can find best-fit markets in sectors such as Bollywood, the world’s largest film industry.
India has set its eyes firmly on the future. To date, the government has launched highly ambitious strategic programs, such as Make in India, Digital India, 100 Smart Cities and 10,000 Startups. In the last quarter of 2016, India took the sudden, but strategic, move of demonetizing its large currencies. Although it resulted in temporary setbacks in terms of consumer spending and demand, the benefits are seen to far outweigh the disadvantages in the mid to longer term. As a result, much of India’s consumer public—particularly in the urban areas moved toward digitalization, opening e-wallets and driving informal economic activities into the formal economy, resulting in higher revenues for the government’s coffers to fund infrastructure development and other national capacity-building projects.
In retail, India is Amazon’s fastest-growing market worldwide, in addition to its own major conglomerates putting up their own e-commerce portals, which are changing the way Indians buy their needs and wants. These e-commerce platforms can also very well serve as an efficient gateway for Philippine products to penetrate the Indian market.
India’s trade and fiscal policies also point toward high-level engagements with other major trading partners. In particular interest is its Act East policy, which is the India’s priority government directive to directly engage the Asean region in terms of trade and commercial relations. The Philippines lags behind many of its Asean neighbors in terms of commercial relations with India.
The recently ratified Asean-India Free Trade Agreement (FTA) is also seen to open the floodgates for significant increase in trade and investments between India and the fast-growing Southeast Asian region countries. This year, as the Philippines hosts the Asean, comes the unique opportunity to lead engagements with India. With the gradual, but steady decline in import duties, bilateral trade is seen to increase dramatically in the next five to seven years. It is important for the Philippines not to be left behind by other countries when these tariff barriers are eliminated as a result of the FTA.
India also actively works with its dialogue partners to further the goals of RCEP (Regional Comprehensive Economic Partnership), where the Philippines is an active dialogue partner along with the Asean. A few Philippine conglomerates set its sights on opportunities in India, such as Del Monte Philippines, through a joint venture with conglomerate Bharti. Liwayway Marketing Corp. has also established a significant manufacturing base and market in three of India’s major states. With these pioneers, it is hoped that more Philippine companies will follow suit.
One major challenge is the lack of awareness and interest by the business communities of both countries on massive trade potential. Another challenge is the lack of direct flights between the two countries, an initiative that we hope the private sector will soon remedy.
For the past year, we have seen increased interest from Indian investors, particularly in the IT-BPM sectors, startups, automotive sector and participation in PPP projects. As opportunities expand, we project increased trade and exchange of investments between the two countries to continue on their uptrend swing. We hope that more and more Philippine businesses seriously consider the enormous opportunities the Indian market offers.
For more information on the PTIC in New Delhi, check out our web site at investphilippinesindia.org and follow us on your favorite social media platforms: www.facebook.com/investphilippinesindia / www.twitter.com/phbizindia.