Asia and the Asean region have emerged as key trading partners for India with growing export of agricultural produce, frozen meat and seafood, and import of China-made goods lifting trade on these routes to higher levels.
India's exports to Asia and the Asean region jumped 28.86 percent to US$72.6 billion in the 12 months to March, accounting for 49.78 percent of India's total exports by value.
In comparison, exports to North America rose 11.39 percent to $2.3 billion in the same period, making up 15.85 percent of exports by value.
Singapore-based container shipping firm Pacific International Lines (Pte), which runs a regular service from Jawaharlal Nehru (JN) Port in Mumbai to several Asian countries such as China, Malaysia, Thailand, Indonesia, Vietnam, the Philippines, Korea and Japan, said trade between India and the rest of Asia is very buoyant and will grow strongly in future.
The booming trade between India and the rest of Asia has come as a silver lining for container shipping firms, which, reeling under a slowdown in the US, have cut freight rates to less than half of what was prevailing two years ago. This has forced many carriers to cut capacity by discontinuing service on the Asia-US sector.
Container shipping lines are now earning more on cargo coming into India from Asia, particularly China, than on those going out of India, said Shanat Shetty, head, ocean freight services centre, India, at Swiss freight forwarder Panalpina.
Indian corporations such as Reliance Industries and Pantaloon Retail are importing large quantities of products from China and a shortage of shipping capacity on this route has made freight rates rise $1,050 for shipping a TEU, from Shanghai to India. For a 40-ft container, the ocean freight rate on the same route is now hovering at $1,800.
India ships more than 100,000 TEUs to Asia, at a growth of more than 10 percent a year. The ocean freight for hauling container cargo from India to Asia is comparatively less due to a large number of services operated by a slew of shipping lines.
Exports to the US so far constituted a major chunk of India's exports. Priya Safaya Fotedar, director, policy at the Federation of Indian Export Organizations said following the housing market slump in the US, there is a slowdown in that market. There is, therefore, a need to tap markets elsewhere, such as the Asian countries and Asean which have registered very good growth rates. The US economy is expected to grow at two percent this year.
In a letter written recently to the finance ministry's department of economic affairs, Ajay Sahai, director general of the federation, has urged the government to make an assessment of the product-country matrix for the Asia and Asean region, for which the government has targeted an export of $50 billion by 2010.
The federation has also suggested that the Reserve Bank of India consider issuing guidelines for 'entrepot trade' as South-East Asian countries such as Singapore are important transit routes where value addition can be made on Indian merchandise for further export. Entrepot trade refers to goods shipped from one country to another through a third country for further processing or assembly.
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