Report of the Joint Study Group on the Feasibility of India-Indonesia ...

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1 Contents Page No. Letter <strong>of</strong> Transmittal 2 Acknowledgement Executive Summary 3 - 5 I. Overview 6 - 7 II. Trade in Goods 8 - 30 III. Investment 31 - 56 IV. Trade in Services 57 - 78 V. O<strong>the</strong>r Areas <strong>of</strong> Economic Cooperation 79 - 88 VI. Conclusions and Recommendations 89 - 93 Annexures Annex I. Terms <strong>of</strong> Reference (ToR) 1 - 2 Annexure 1. Composition <strong>of</strong> India's Exports to Indonesia 3 - 5 Annexure 2. Sectors with Dynamic Comparative Advantage in India: Percentage Change in RCA (2001-2005) 6 – 12 Annexure 3. Indonesia as an Export Destination for Indian Products with Different Degrees <strong>of</strong> Attractiveness 13 - 16 Annexure 4. Potential for Bilateral Trade at HS 6 digit level 17 - 57 Annexure 5. Items Amenable for Intra-Industry Trade between India and Indonesia 58 - 74 Annexure 6. India's Export Potential Product Lines Facing Relatively High Import Tariff in Indonesia 75 - 84 Annexure 7. Macro Economic Indicators <strong>of</strong> India and Indonesia 85 - 88 Annexure A. Policy on Foreign Direct Investment (FDI) 89 - 95 Annexure B. Sectors Restricted/Closed for Foreign Participation 96 Annexure C. Investment Incentive 97 Annexure D. Share <strong>of</strong> Services in Trade 98 - 101
2 Letter <strong>of</strong> Transmittal 1. H. E. Dr. Manmohan Singh, Prime Minister <strong>of</strong> India and H. E. Dr. H. Susilo Bambang Yudhoyono, in November 2005, declared initiation <strong>of</strong> a New Strategic Partnership between India and Indonesia and had agreed to take <strong>the</strong> bilateral trade to US$ 10 billion by 2010. The Leaders also signed a MoU to set up a <strong>Joint</strong> <strong>Study</strong> <strong>Group</strong> to examine <strong>the</strong> feasibility <strong>of</strong> a Comprehensive Economic Cooperation Agreement (CECA) between <strong>the</strong> two countries. 2. The <strong>Joint</strong> <strong>Study</strong> <strong>Group</strong> was constituted comprising government <strong>of</strong>ficials and economists from India and Indonesia and it held 4 meetings to finalise <strong>the</strong> <strong>Study</strong>. The <strong>Study</strong> demonstrates that significant economic complementarities exist between <strong>the</strong> Indian and Indonesian economies and evolving bilateral CECA could provide opportunities to tap immense potential for goods’trade and welfare gains that could be fur<strong>the</strong>r enhanced by including trade in services and fostering investment cooperation. 3. The <strong>Joint</strong> <strong>Study</strong> <strong>Group</strong> recommends launching <strong>of</strong> negotiations between <strong>the</strong> two countries towards <strong>the</strong> proposed CECA by constituting a Trade Negotiating Committee (TNC) covering substantially all trade in goods and services; investment; trade facilitation; and o<strong>the</strong>r areas <strong>of</strong> economic cooperation, as a ‘single undertaking’. 4. We, <strong>the</strong> Co-Chairs <strong>of</strong> <strong>the</strong> <strong>Joint</strong> <strong>Study</strong> <strong>Group</strong>, hereby submit our <strong>Report</strong> to <strong>the</strong> Governments <strong>of</strong> India and Indonesia. 5. Done on 15 th September 2009 in Jakarta, Indonesia for India (R. Gopalan) Co-Chair, India for Indonesia (Marwoto Hadi Soesastro) Co-Chair, Indonesia
Page 1: 0 Report o
Page 5 and 6: 4 4. These estimates were complemen
Page 7 and 8: 6 I. Overview The bilateral relatio
Page 9 and 10: 8 II. Trade in Goods II. 1. Introdu
Page 11 and 12: 10 Box 2 : Indonesia’s Trade Poli
Page 13 and 14: 12 Indonesia has stressed that <str
Page 15 and 16: 14 II.2.2. Volatility This fluctuat
Page 17 and 18: 16 Table 4. Relative Importance <st
Page 19 and 20: 18 Nevertheless, d
Page 21 and 22: 20 II.7.1. Rules of</strong
Page 23 and 24: 22 II. 7. 3. TBT, Sanitary and Phyt
Page 25 and 26: 24 II.8.2. CGE Simulations To compl
Page 27 and 28: 26 Objectives The national steel in
Page 29 and 30: 28 Table 9. Trade Complementarities
Page 31 and 32: 30 Intra industy trade has been bei
Page 33 and 34: 32 India has improved its position
Page 35 and 36: 34 the Government
Page 37 and 38: 36 (D). FDI has been allowed up to
Page 39 and 40: 38 public health safety and securit
Page 41 and 42: 40 Table 11 Portfolio investment fl
Page 43 and 44: 42 event that the
Page 45 and 46: 44 underpinned by high protection a
Page 47 and 48: 46 From August 1991 to December 200
Page 49 and 50: 48 A perusal of <s
Page 51 and 52: 50 III.4.2. Indonesia Indonesia ran
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52 largest Indian investments took
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54 Number Business Field Region/Pro
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56 - identify target areas for tech
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58 of prof
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60 3.10. Construction and Related E
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62 With an ICT penetration rate <st
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64 telecommunication services in In
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66 operate international telephone
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68 Banking Architecture (API). API
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70 Under the propo
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72 3. To improve the</stron
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74 IV.4.9.2. India Given India's un
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76 is limited up to 49 per cent. On
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78 • Have substantial sectoral co
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80 • Availability of</str
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82 V. 5.3. Forestry Indonesia has a
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84 V.6. Cooperation in Transportati
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86 countries/ agencies, after signi
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88 For enhancing training and educa
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90 In a partial-equilibrium framewo
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92 VI.4 Trade in Services In respec
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1 Terms of Referen
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3 Table A.I.1 Composition o
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5 Table A.I.2 Composition o
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7 Annexure 2 Table A.II.I Sectors w
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9 Table A.II.I Sectors with Dynamic
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11 Table A.II.2 Sectors with Dynami
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13 Annexure 3 Table A.III.1 Indones
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15 Table A.III.2 Indonesia as an Im
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17 Annexure 4 Table A.IV.1 Potentia
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19 Table A.IV.1 Potential for India
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45 Table A.IV.3 Potential for <stro
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59 Table A.V.1 Items Amenable for I
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75 Annexure 6 HS 6-digit Code Table
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77 HS 6-digit Code Table A.VI.1 Ind
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85 Annexure 7 Table: Macro Economic
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87 Forecasting India’s exports to
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89 POLICY ON FOREIGN DIRECT INVESTM
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91 (iii) Other ser
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93 vii) viii) ix) x) xi) xii) xiii)
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95 30. Satellites - Establishment a
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97 Investment Incentives Annexure C
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99 India's share in Asia**) 2.46 4.
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101 Fig 6: Comparative Trend in RCA
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Report of the Joint Study Group on the Feasibility of India-Indonesia ...

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