Transcript Slide 1

EU-India Trade and
Transport Integration
Prabir De
RIS, New Delhi
TRANSBALTIC CONFERENCE 2010
17-18 March 2010, Malmö, Sweden
Presentation Outline
 Introduction
 EU

– Asia trade
EU- India trade
 EU-Asia
transport linkages
 Trade barriers
 India infrastructure projects
 Opportunities for Baltic Sea region for
EU– India trade
Rise of regionalism
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Regional trade agreements (RTAs) have increased by nearly
five-fold over 1990-2008, from 86 in 1990 to 421 in 2008
(WTO, 2009)
Among the Asian countries, India leads with the largest
number of FTAs (30), followed by Singapore (26), China and
Korea (22 each) and Japan (19).
EU is India’s largest trading partner while India ranks as the
EU’s 10th most important trading partner and that trade in
goods more than doubled over 2000-2008 (EUROSTAT 2009).
In 2008, nearly 22% of total India’s exports went to the EU and
18% of India’s total imports came from the EU.
Top export destinations within the EU were Germany (26%)
followed by the United Kingdom (16%) and Belgium (13%).
Goods exports have grown at an average of 14% per year,
particularly commodities and manufacturing goods.
A large portion of India – EU trade is remained unrealized.
India – EU FTA negotiation has been slow.
India has high trade potential,
but largely unrealized
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International trade in India is moving below
potential
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Global trade in 2006: US$ 350 billion
Global trade potential: US$ 680 billion
About 48% of trade potential is remained to be
realized
Causes of high underutilization of trade are
mostly economic in nature
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High trade barriers – both visible and invisible
Poor transportation links
Inadequate trade facilitation measures
Lack of supply capabilities
Poor infrastructure holding
back India’s growth
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Infrastructure in South Asian
countries is largely
inadequate and generally of
poor quality.
Infrastructure gap in South
Asia in terms of the index
widened than narrowed.
South Asia’s growth potential
will be realized only if we can
narrow the infrastructure gap,
not only between them but
also with the global best
practice.
Laggard areas (pocket of
deficits) in South Asia need
utmost importance so that
they can enjoy the
opportunities created by
regional trade liberalization
and integration.
South Asia in Global Infrastructure Rankings:
RIS Index
Countries
1991
2000
2006
Index
Rank
Index
Rank
Index
Rank
India
3.48
50
3.95
49
4.49
51
Sri Lanka
2.57
62
3.18
56
4.35
53
Pakistan
2.39
64
2.26
68
2.89
66
Bangladesh
1.83
73
2.12
71
2.5
74
Nepal
1.29
81
1.37
81
1.38
86
Source: Kumar, N. and P. De (2008), and RIS (2008)
India’s soft infrastructure grew much
faster than hard infrastructure
Particulars
1991
2000
2006
AAGR (%)
1991-2006
Railways length (1000 km)
62.46
62.76
63.47
0.13
Road length (million km)
2.35
3.32
3.85
5.32
7
36
128
150.35
Air freight (million tons per km)
493.10
547.65
773.22
4.73
Air passengers carried (million)
10.72
17.30
27.53
13.07
Air transport, registered carrier departures
worldwide (million)
0.12
0.20
0.33
14.89
Container port traffic (million TEUs)
0.15
2.45
4.94
266.01
Electric power consumption (kWh per
capita)
295.02
402.02
457.32
4.58
Electric power consumption (kWh)
255.65
408.42
493.78
7.76
Fixed line and mobile phone subscribers
(per 1,000 people)
Note: AAGR – Annual Average Growth Rate (%)
Source: World Development Indicators CD ROM 2009, World Bank
India needs huge investment in
physical infrastructure development
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Supply side bottleneck – Country’s
investment in physical infrastructure is very
low - 4.86% of GDP in 2004-05.
‘Deficit Everywhere’ (contrary to ‘India
Everywhere’ in Davos)
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Shortfall in capacity in port and poor
performance (avg. 24 box / hour
handling rate; avg. 3 days to clear a
container vessel, 6 days to clear a
export consignment at port)
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Same repeat at airports (Delhi,
Mumbai……)
Planning Commission desired to raise the
investments from 4.86% of GDP to 7.5% in
the 11th Five Year Plan (FYP) period.
Requirement is US$ 320 billion, estimated
by Planning Commission, during the 11th
FYP (2007-2011)
Infrastructure is the critical element to
India’s growth.
Investment in Infrastructure as
Percent of GDP
Year
Public Private Total
(%)
(%)
(%)
1991-92
4.00
1.40
5.40
1995-96
3.20
1.10
4.30
2001-02
3.10
1.70
4.80
2004-05
3.10
1.76
4.86
EU’s Trade with Asia
Growing Fast
EU (25) trade with China (2008)
Product*
Total
Product Name
All Commodities
Export
Share**
Import
Share**
(US$ bln.)
(%)
(US$ bln.)
(%)
113.51
1.98
384.718
6.477
0
Food and live animals
1.35
0.38
5.457
1.427
1
Beverages and tobacco
0.61
0.82
0.127
0.237
2
Crude materials, inedible, except
7.43
5.26
4.176
2.054
3
Mineral fuels, lubricants and relat
0.27
0.08
1.539
0.178
4
Animal and vegetable oils, fats and
0.07
0.33
0.059
0.207
5
Chemicals and related products, n.e
12.22
1.43
13.756
1.856
6
Manufactured goods classified chief
13.25
1.50
55.582
6.670
7
Machinery and transport equipment
67.46
3.14
172.080
9.199
8
Miscellaneous manufactured articles
7.64
1.29
130.138
20.059
9
Commodities and transactions not cl
3.10
0.99
1.258
0.404
*SITC revision 4
** Share in total trade
Source: UNCOMTRADE
EU (25) trade with Indonesia (2008)
Product*
Export
Share**
Import
Share**
(US$ bln.)
(%)
(US$ bln.)
(%)
All Commodities
8.63
0.15
21.574
0.363
0
Food and live animals
0.36
0.10
1.533
0.401
1
Beverages and tobacco
0.03
0.04
0.129
0.240
2
Crude materials, inedible, except f
0.47
0.33
2.228
1.096
3
Mineral fuels, lubricants and relat
0.02
0.00
2.060
0.238
4
Animal and vegetable oils, fats and
0.01
0.05
2.848
10.016
5
Chemicals and related products, n.e
1.54
0.18
0.850
0.115
6
Manufactured goods classified chief
1.08
0.12
2.619
0.314
7
Machinery and transport equipment
4.37
0.20
3.355
0.179
8
Miscellaneous manufactured articles
0.39
0.07
5.808
0.895
9
Commodities and transactions not cl
0.35
0.11
0.048
0.015
Total
Product Name
*SITC revision 4
** Share in total trade
Source: UNCOMTRADE
EU (25) trade with India (2008)
Product*
Export
Share**
Import
Share**
(US$ bln.)
(%)
(US$ bln.)
(%)
All Commodities
45.62
0.80
44.756
0.753
0
Food and live animals
0.16
0.04
2.755
0.721
1
Beverages and tobacco
0.10
0.14
0.132
0.247
2
Crude materials, inedible, except f
1.91
1.36
1.172
0.577
3
Mineral fuels, lubricants and relat
0.29
0.08
3.351
0.386
4
Animal and vegetable oils, fats and
0.02
0.09
0.317
1.115
5
Chemicals and related products, n.e
4.36
0.51
4.854
0.655
6
Manufactured goods classified chief
14.15
1.61
12.659
1.519
7
Machinery and transport equipment
20.10
0.94
7.161
0.383
8
Miscellaneous manufactured articles
2.98
0.50
12.056
1.858
9
Commodities and transactions not cl
1.48
0.48
0.269
0.086
Total
*SITC revision 4
Product Name
** Share in total trade
Source: UNCOMTRADE
EU (25) trade with Japan (2008)
Product*
Export
Share**
Import
Share**
(US$ bln.)
(%)
(US$ bln.)
(%)
All Commodities
61.16
1.07
129.758
2.184
0
Food and live animals
3.66
1.03
0.174
0.045
1
Beverages and tobacco
2.05
2.77
0.020
0.037
2
Crude materials, inedible, except f
1.64
1.16
0.976
0.480
3
Mineral fuels, lubricants and relat
0.74
0.21
0.942
0.109
4
Animal and vegetable oils, fats and
0.23
1.07
0.027
0.096
5
Chemicals and related products, n.e
13.08
1.53
10.091
1.361
6
Manufactured goods classified chief
5.71
0.65
7.981
0.958
7
Machinery and transport equipment
21.48
1.00
94.074
5.029
8
Miscellaneous manufactured articles
10.41
1.76
14.700
2.266
9
Commodities and transactions not cl
1.49
0.48
0.506
0.162
Total
*SITC revision 4
Product Name
** Share in total trade
Source: UNCOMTRADE
EU (25) trade with Korea (2008)
Product*
Export
Share**
Import
Share**
(US$ bln.)
(%)
(US$ bln.)
(%)
All Commodities
37.29
0.65
61.867
1.042
0
Food and live animals
0.91
0.26
0.164
0.043
1
Beverages and tobacco
0.47
0.63
0.023
0.043
2
Crude materials, inedible, except f
0.77
0.54
0.613
0.302
3
Mineral fuels, lubricants and relat
0.72
0.21
2.195
0.253
4
Animal and vegetable oils, fats and
0.09
0.43
0.001
0.005
5
Chemicals and related products, n.e
6.07
0.71
2.454
0.331
6
Manufactured goods classified chief
4.50
0.51
6.175
0.741
7
Machinery and transport equipment
17.97
0.84
46.000
2.459
8
Miscellaneous manufactured articles
3.98
0.67
4.061
0.626
9
Commodities and transactions not cl
1.68
0.54
0.160
0.051
Total
Product Name
*SITC revision 4
** Share in total trade
Source: UNCOMTRADE
EU (25) trade with Malaysia (2008)
Product*
Export
Share**
Import
Share**
(US$ bln.)
(%)
(US$ bln.)
(%)
All Commodities
16.78
0.29
28.140
0.474
0
Food and live animals
0.38
0.11
0.619
0.162
1
Beverages and tobacco
0.11
0.14
0.004
0.008
2
Crude materials, inedible, except f
0.43
0.31
1.519
0.747
3
Mineral fuels, lubricants and relat
0.08
0.02
0.402
0.046
4
Animal and vegetable oils, fats and
0.01
0.04
1.953
6.869
5
Chemicals and related products, n.e
1.50
0.18
0.995
0.134
6
Manufactured goods classified chief
1.66
0.19
1.515
0.182
7
Machinery and transport equipment
10.97
0.51
17.590
0.940
8
Miscellaneous manufactured articles
1.20
0.20
3.367
0.519
9
Commodities and transactions not cl
0.40
0.13
0.140
0.045
Total
*SITC revision 4
Product Name
** Share in total trade
Source: UNCOMTRADE
EU (25) trade with Thailand (2008)
Product*
Export
Share**
Import
Share**
(US$ bln.)
(%)
(US$ bln.)
(%)
All Commodities
12.22
0.21
28.629
0.482
0
Food and live animals
0.52
0.15
3.686
0.964
1
Beverages and tobacco
0.12
0.17
0.052
0.096
2
Crude materials, inedible, except f
0.46
0.33
0.962
0.473
3
Mineral fuels, lubricants and relat
0.05
0.01
0.251
0.029
4
Animal and vegetable oils, fats and
0.02
0.08
0.147
0.516
5
Chemicals and related products, n.e
2.26
0.26
1.117
0.151
6
Manufactured goods classified chief
2.05
0.23
2.519
0.302
7
Machinery and transport equipment
5.41
0.25
13.859
0.741
8
Miscellaneous manufactured articles
0.90
0.15
5.888
0.908
9
Commodities and transactions not cl
0.38
0.12
0.122
0.039
Total
Product Name
*SITC revision 4
** Share in total trade
Source: UNCOMTRADE
Transport costs outweigh
tariff in EU-Asia trade
Transport costs outweigh tariff in
EU-Asia trade
Importer: European Union (27)
Exporter
1981-1990
1991
1991-2000
2001
2001-2008
2007#
Transport
cost (%)*
Tariff
(%)**
Transport
cost (%)*
Tariff
(%)**
Transport
cost (%)*
Tariff
(%)**
China
22.686
13.580
44.131
7.070
27.898
6.360
India
22.715
13.500
19.354
7.070
12.237
6.720
Indonesia
17.613
12.560
17.257
7.760
25.023
7.170
Japan
8.192
12.630
10.541
5.670
7.802
5.030
Malaysia
9.413
14.600
11.483
5.580
18.994
5.280
Thailand
8.864
14.340
5.559
7.600
10.535
6.980
*Ad-valorem (as % of import value), simple average, calculated based on DOTS, IMF
** Simple average tariff, sourced from WITS, World Bank
Source: Author
#Averaged over 2003-2007
India has high trade
potential with EU
India’s trade potential with EU
(contd.)
(Gravity model)
2008*
2008
2009
Partner
2010
2011
2012
2013
2014
(US$ billion)
AAGR#
(%)
AUSTRIA
1.08
1.40
1.28
1.48
1.67
1.93
2.26
2.64
14.73
BELGIUMLUXEMBOURG
9.57
25.74
23.75
27.50
31.49
36.41
42.55
49.64
15.47
BULGARIA
0.15
0.41
0.37
0.41
0.47
0.57
0.72
0.89
19.71
CYPRUS
0.35
0.00
0.00
0.00
0.00
0.00
0.00
0.00
20.44
DENMARK
1.03
2.21
2.03
2.40
2.78
3.30
3.94
4.64
18.30
ESTONIA
0.07
0.10
0.07
0.08
0.09
0.10
0.13
0.15
9.34
FINLAND
1.40
1.99
1.78
2.07
2.40
2.81
3.33
3.94
16.33
FRANCE
8.03
13.05
12.16
14.11
16.17
18.80
22.07
25.78
16.27
GERMANY
17.28
26.19
23.12
26.36
29.51
33.55
38.51
44.00
11.34
GREECE
0.88
1.54
1.49
1.72
1.95
2.25
2.63
3.05
16.46
HUNGARY
0.55
0.65
0.50
0.60
0.71
0.87
1.05
1.27
15.84
IRELAND
0.65
1.39
1.17
1.28
1.42
1.64
1.91
2.20
9.81
India’s trade potential with EU
Partner
2008*
2008
2009
2010
2011
2012
2013
2014
AAGR#
ITALY
8.02
14.25
12.98
15.02
16.92
19.41
22.53
26.18
13.96
LATVIA
0.15
0.26
0.18
0.17
0.19
0.23
0.27
0.33
4.32
LITHUANIA
0.49
0.18
0.13
0.14
0.16
0.19
0.23
0.27
8.41
MALTA
0.09
0.20
0.19
0.22
0.25
0.30
0.36
0.43
19.33
NETHERLANDS
7.90
10.68
9.69
11.26
12.71
14.62
17.04
19.88
14.37
POLAND
0.74
1.69
1.32
1.49
1.75
2.09
2.54
3.09
13.84
PORTUGAL
0.50
0.95
0.86
1.00
1.12
1.29
1.50
1.73
13.61
ROMANIA
0.78
1.76
1.38
1.59
1.98
2.68
3.61
4.73
28.09
SLOVAK REPUBLIC
0.08
0.00
0.00
0.00
0.00
0.00
0.01
0.01
24.58
SLOVENIA
0.22
0.00
0.00
0.00
0.00
0.00
0.01
0.01
19.55
SPAIN
3.42
7.16
6.48
7.36
8.22
9.36
10.81
12.51
12.46
SWEDEN
2.54
3.70
3.03
3.76
4.54
5.47
6.58
7.88
18.86
UNITED KINGDOM
12.20
27.29
22.00
26.41
31.11
37.36
45.23
54.69
16.73
EU (25)
78.16
142.78
125.96
146.44
167.64
195.27
229.81
269.94
14.84
Notes: *Actual trade. #Average annual growth rate
Source: De, Prabir, (2010), South Asia: Trade Integration after the Global Financial Crisis, Mimeo, World Bank, Washington, D.C
India offers high investment
opportunities in infrastructure
Sectors
Anticipated
Investment in 10th
FYP (2002-2007)
Projected Investment
in 11th FYP (20072011)
Percentage
Change
US$ billion
%
Electricity
70.5
150.4
111.3
Roads and bridges
31.7
76.1
140.1
Telecom
22.5
65.1
189.3
Railways
20.3
62.2
206.4
Irrigation
32.1
53.1
65.4
Water and sanitation
15.6
48.6
211.5
Ports
1.3
18.0
1284.6
Airports
2.1
8.5
304.8
Storage
2.3
5.5
139.1
Gas
2.1
5.0
138.1
Total
200.5
492.5
145.6
Telecom, Tourism, SEZs & Townships, Supporting Urban Infrastructure, Water & Sanitation, State & Rural Roads, Logistics etc.
Source: Planning Commission, Government of India
Delhi – Mumbai Industrial Corridor
(DMIC)
Dedicated Freight Corridors
SPV - India Infrastructure
Finance Company Limited

Lack of long term debt in capital markets

SPV to provide long term debt to viable infrastructure
projects
 Direct lending to PPP and public sector projects
 Refinance for private projects

Funds to be raised from domestic and external markets on
strength of government guarantees

Reliance on lead bank for appraisal and lending operations

Guarantee limit of Rs.100 billion for first year of operation
India’s Overland Connectivity
with East Asia
Potential Transport Hubs in South Asia
Towards
Central Asia
Towards
Middle East
Nepal
China
Bhutan


Afghanista
n
Overland
Pakistan
Myanma
r
India
Maldives
Banglades
h

Maritime
Towards West
Asia / Europe
Sri Lanka
Maritime
Hub
Towards
Southeast /
East Asia &
Pacific
India – MyanmarThailand Trilateral
Highway
India – Myanmar –
Thailand – Vietnam
Railway Cooperation:
Delhi – Hanoi
Railway Link
Afghanistan –
Pakistan – India –
Bangladesh –
Myanmar (APIBM)
Transport Corridor
Opportunities for Baltic Sea
region for EU– India trade

EU- India investment towards production /
services networks holds the key



Removal of trade barriers


Baltic sea region has to increase its FDI in India
India – Germany partnership a successful case
Higher trade costs impede trade flows between India
and EU
Opening of Asia – Europe overland connectivity

Extending Asian Highway / Trans-Asian Railway
Thank you
For further information, please contact
Prabir De, PhD
Fellow
Research and Information System for Developing Countries (RIS)
India Habitat Centre
Lodhi Road
New Delhi, India
Tel. (+91-11) 2468 2177
Fax. (+91-11) 2468 2174
Email: [email protected]
[email protected]
Web: www.ris.org.in