India calls for diversification of export basket for sustainable trade with Indonesia

India Tuesday raised concerns about widening trade deficit with Indonesia and called for diversifying the export basket for sustainable trade.

The issue was flagged by Commerce and Industry Minister Piyush Goyal in his meeting with Indonesian Minister of Trade Enggartiasto Lukita here.

"Goyal raised concerns about India's trade deficit with Indonesia which stood at USD 10.57 billion in India's trade deficit with Indonesia during 2018-19," the commerce ministry said in a statement.

He said the balance of trade is heavily in favour of Indonesia and both countries need to work towards establishing sustainable trade by diversifying the export basket.

"There is considerable potential for expanding trade in agricultural, automobiles, engineering products, IT, pharmaceuticals, bio-technology and healthcare sectors," he added.

With a bilateral trade of USD 21.13 billion in 2018-19, Indonesia has emerged as the second-largest trading partner of India in the ASEAN region after Singapore.

Goyal also highlighted India's concern on the import quota restrictions faced by Indian automobile and automobile component industries in Indonesia on completely built-up units (CBU) and tyres.

"These restricted import quota prescribed by Indonesia for Indian vehicles in CBU condition has adversely impacted Indian exports. Long lead time taken for regulatory certification for new vehicles also affects launch of new products," he said.

He added that Indonesia adopts standards for emission which is not commensurate with the global emission norms for fuel efficiency in automobiles.

Further, other competitors have better market access advantage over Indian automakers due to bilateral free-trade arrangements.

"Indonesian minister assured Piyush Goyal that he would address this gap," the ministry said.

The minister requested the Indonesian side to allow Indian-origin Frozen Halal Buffalo Meet (FHBM) free and directly to importers or distributors of Indonesia through various important ports, without quotas and restrictions.

The Indonesian side assured that there will be no quota restrictions from authorised exporters as long as quality is maintained.

India also sought greater market access for agricultural products such as musk melon, bitter gourd, grapes, pumpkin and milk products.

The Indonesian side assured India that it will facilitate sourcing of sugar from New Delhi by reducing tariffs and regularising standards as per India's requirement.

On the other hand, Indonesian side requested for parity on duty with Malaysian exports of refined palm oil with India where it is currently suffering 5 per cent disadvantage.

The Indian commerce minister assured that he will take up this issue with the ministry concerned.