7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
1/39
Chapter
2
DevelopmentandCurrentStatusofMachineryTradebetweenASEANandIndiaAyakoObashiUniversityofWisconsin-Madisons
December2011
ThischaptershouldbecitedasObashi,A.(2011),DevelopmentandCurrentStatusofMachineryTradebetweenASEANandIndia inKimura,F.andS.Umezaki(eds.),ASEAN-IndiaConnectivity:TheComprehensiveAsiaDevelopmentPlan,PhaseII,ERIAResearchProjectReport2010-7,Jakarta:ERIA,pp.57-94.
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
2/39
CHAPTER2.DEVELOPMENTANDCURRENTSTATUSOFMACHINERYTRADE
BETWEENASEANANDINDIAAYAKOOBASHI
AbstractTheimportanceoftheASEANasdestinationofIndiasexportsofmachineryhas
nearlydoubledoverthelastfewyears. Meanwhile,theproportionofmachineryintheASEANs total importsfromIndia,orIndiasexports to theASEAN,hasdoubledoverthe lastseveralyears thoughnotto the levelof themachineryssharefortheASEANsexportside. Inrelativeterms,theASEANmemberstatestendtoexportmoremachinerypartstoandimportmorefinishedmachineryproductsfromIndia,comparedto twodecadesago. In theASEANsmachineryexports toIndia,computerpartsandaccessoriesandelectricintegratedcircuitsarethetoptwogoods. IntheASEANsmachineryimportsfromIndia,therewasanoticeablesurgeintheimportsofmobilephonesinthelastseveralyears. SingaporehasbeenaleadingexporterandimporterintheASEANsmachinerytradewithIndia,butfortheASEANsimportside,IndonesiahasrapidlyincreasedtheimportsoffinishedmachineryproductsincludingmobilephonesoverthelastseveralyearstothelevelexceedingSingaporeinvalue.
57
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
3/39
1.INTRODUCTIONThischapteraimsatdeepeningourbasicunderstandingonthedevelopmentand
currentstatusoftradeinmachinerybetweentheASEANmemberstatesandIndia.BilateralinternationaltradedatafortheASEANandIndiaareexaminedfromvariousaspects. Section2examinesdatafortheASEANsexportstotheworldbydestinationanditsimportsbyorigin,considering theimportanceofIndiaasits tradingpartner. TheASEANspresenceinIndiasexportstoandimportsfromtheworldisalsoconsidered. Section3looksattheASEANsexportstoandimportsfromIndiabyindustry,withaspecialinterestinmachinery. Section4focusesontheASEANstradeinmachinerywithIndia. TheASEANsmachineryexports toandimportsfromIndiaarebrokendownbycountryandbymachinerysubsector. ThefinalsectionprovidesabriefsummaryoftheobservedfactsonmachinerytradebetweentheASEANandIndiaandconcludeswithdiscussionontheimpactoftheNokiaslaunchofmobiledevicemanufacturingfacilityinIndiain2006onIndiasexportsofmobilephonestotheASEAN.
2. ASEANANDINDIASEXPORTSTOANDIMPORTSFROMTHEWORLD
ThissectionexaminesdataforthetotalmerchandiseexportsbytheASEANtotheworldbydestinationanditsimportsbyorigintoconsidertherelativeimportanceofIndiaasitstradingpartner. ThesameexaminationisdonewiththeimportanceofASEANinIndiastotalmerchandiseexportstoandimportsfromtheworld.
58
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
4/39
BilateralexportandimportdatausedthroughoutthischapterareobtainedfromtheUnitedNationsCommodityTradeStatisticsDatabase(UNComtrade). IhavecleaneduprawdataobtainedfromtheUNComtradeasdescribedinAppendixA.1. TheASEANhere includes Indonesia,Malaysia,Philippines,Singapore,Thailand,andVietNam. Duetothescarcityoftradedatafortheperiodofinterest,Brunei,Myanmar,Cambodia,andLaosareexcludedfromsample. Thedatasetcoverstheyears1990,1995,and2000-2009.1
2-1. ByExportDestinationandImportOriginWebeginbyexaminingonhowimportantIndiaisastheASEANstradingpartner,
andviceversa. TheuppertableofTable1showstheproportionsofIndiaasdestinationoftheASEANstotalexportsandasoriginoftheASEANs totalimportsin1990,2000,and2009. Thefiguresarereportedforexportsandimportsofallcommodities,thoseofmanufacturedgoods,andthoseofmachinery. FortheASEANstradeinallcommodities,thepercentageofIndiaasexportdestinationhasdoubledfrom1.6%in2000to3.3%in2009whileitspercentageasimportdestinationalsohasdoubledfrom1.0%in2000to2.1%in2009. AsimilarriseintheIndiassharebothastheASEANsexportdestinationandimportorigincanbeobservedfortradeinmanufacturedgoodsandthatinmachinery. Nevertheless,IndiaisstillofslightimportancebothintheASEANsexportsandimports,withitsshareasdestinationandoriginlimitedto2-3%asof2009.
1 ASEAN-IndiaFTAwhichtookeffectinJanuary2010isbeyondthescopeofmyanalysis.
59
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
5/39
Table1: TheProportionsofIndia/ASEANastheASEAN/IndiasExportDestinationandImportOrigin
ForASEAN Indiaasexportdestination Indiaasimportorigin1990 2000 2009 1990 2000 2009
Allcommodities 1.3% 1.6% 3.3% 0.9% 1.0% 2.1%Manufacturedgoods 1.1% 1.3% 2.7% 0.9% 0.8% 1.7%Machinery 0.9% 1.0% 2.4% 0.3% 0.3% 0.9%
ForIndia ASEANasexportdestination ASEANasimportorigin1990
2000
2009
1990
2000
2009
Allcommodities 5.4% 6.5% 10.6% 6.3% 11.0% 9.1%Manufacturedgoods 5.3% 5.9% 9.2% 5.7% 9.9% 7.5%Machinery 12.7% 11.6% 19.2% 6.4% 17.1% 9.9%
Source: UNComtrade(exportandimportstatisticsforallcommodities,manufacturedgoods(HS28-92),andmachinery(HS84-92)reportedbytheASEANmemberstatesandIndia,variousversionsoftheHSclassification).
ThecorrespondingfiguresfortheproportionoftheASEANasIndiasexportdestinationandimportoriginareshowninthelowertableofTable1. ItisobviousataglancethattheASEANbecomesrelativelymoreimportanttradingpartnerforIndia,comparedtotheIndiasimportanceintheASEANstrade. Foreachoftradeinallcommodities, that inmanufacturedgoods,and that inmachinery, thepercentageof theASEANasexportdestinationhasalmostdoubledinthelastdecadethoughitspercentageasimportdestinationhasdecreasedduringthesameperiod. TheriseintheASEANsshareasIndiasexportdestinationisparticularlynoticeableforexportsofmachinery. In2009,aboutonefifth(19.2%)ofIndiasexportsofmachineryweredestinedfortheASEANmemberstates.
60
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
6/39
Figure1providesasnapshotofthetrendinIndiasexportsofmachinerybydestinationintheyears1990,1995,and2000-2009. Inthestackedbarchartofexportvalues,eachexportdestinationcountry/regionisshowninadifferentcolor. ThesolidlinechartshowstheproportionsoftheASEANasIndiasexportdestination,andthedashedlinechartshowsthecorrespondingpercentagesoftheEastAsianregionasawhole, i.e.ASEAN+6.2 Thesolid linechartdemonstrates that theASEANsshareasdestinationofIndiasmachineryexportsleapedinjusttwoyears. TheASEANsshareof Indiasmachineryexportshoveredaround10%from2002 to2007andhasdoubledform10.0% in2007 to19.2% in2009. More interestingly, therise in theEastAsiasshareofIndiasmachineryexportsduringtheperiod2007-2009wasattributedtotheincreasingimportanceoftheASEANasexportdestination. IndiahasbecometoexportmoremachinerytotheASEANmemberstatesratherthantoChinaorotherEastAsiancountries. In2009,theASEANsshareasdestinationofIndiasmachineryexportswas19.2%,whichwasalmost three fourthof thepercentageofEastAsiaasawhole(26.5%).
2 ASEAN+6consistsoftheASEANmembercountries,China,Japan,RepublicofKorea,India,Australia,andNewZealand.
61
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
7/39
Figure1: IndiasMachineryExportsbyDestination
Source: UNComtrade(exportstatistics formachineryindustry(HS84-92)reportedbyIndia,variousversionsoftheHSclassification.
62
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
8/39
AmongtheASEANmemberstates,SingaporehasbeenamajordestinationcountryofIndiasexportsofmachinerythroughouttheperiodofinterestexcepttheyear2001,followedbyMalaysiaandIndonesia. ThetopdestinationsintheASEANin2009areshown in thepiechart in theupper leftpartofFigure1. In2009,40.6%ofIndiasmachineryexportstotheASEANweredestinedforSingapore,28.1%forMalaysia,14.8%forIndonesia,andtherestforThailandandothercountries.
ItshouldbenotedthattherewasanoticeablesurgeinIndiasexportsofmachinerytoMalaysiafrom2008to2009. Beingcuriousaboutthissurge,welookintotheASEANsimportanceinIndiasmachineryexportsbycomparingdataobtainedfromIndiasexportstatisticsandthemirrordatafromtheASEANsimportstatisticsinFigure2. ThebluelinechartsshowthevaluesofIndiasmachineryexportstotheASEANmemberstates reported in Indiasexportstatistics. The red linechartsshowthecorrespondingvaluesof theASEANmemberstatesmachinery importsfromIndiareportedintheASEANmemberstatesimportstatistics.
63
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
9/39
Figure2: IndiasMachineryExportstotheASEANMemberStates:ComparisonofExportStatisticswithImportStatistics
Source: UNComtrade(exportandimportstatisticsformachineryindustry(HS84-92)reportedbyIndiaandtheASEANmemberstates,variousversionsoftheHSclassification).
64
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
10/39
IntheUNComtradedatabase,importsaregenerallyreportedonthebasisofcost,insuranceandfreight(c.i.f.),whileexportsarereportedonafreeonboard(f.o.b.)basis.Thistendstomakeimportvalueshigherthanthecorrespondingexportvalues;however,forSingapore, theexportvaluehasexceeded the importvaluesince2003,and thegapbetweenthevalueshasbeenwideningespeciallyinthelastfewyears. SuchacounterintuitivetrendisalsoobservedforMalaysia,whichhasexperiencedasuddensurgeintheexportvalue,unlikeintheimportvalue,from2008to2009. Thefactthatthevaluesreportedinexportstatisticsarehigherthanthosereportedinimportstatisticscannot,itseems,beexplainedonlybythedifferencesinthetimeofrecording.SingaporeandMalaysiamayberecordedas(immediate)destinationatIndiascustomsbecausetheultimatedestinationmarketcannotnecessarilybespecifiedatthetimeofexport,whichleadstothehighervaluesreportedinexportstatistics. Inotherwords,itappearsthatSingaporeandMalaysiahavebecomemoreimportantforIndiaasentrepttradebase.3 Inaddition,firmslocatedinspecialeconomiczones(SEZ)inIndiawouldtendtooverstatethevaluesoftheirexportstobeawardedspecialtaxprivileges.
3.ASEANSEXPORTSTOANDIMPORTSFROMINDIAThissectionlooksattheASEANstotalmerchandiseexportstoandimportsfrom
Indiaby industry,withaspecial interestinmachinery. Excluding thepossibleeffects3 FurtherdiscussionontheroleofSingaporeandMalaysiaasenterpttradebaseforIndiaisbeyondthescopeofthischapter,becauseofthescarcityofdataforre-exportsandre-imports.SomeofmachinerygoodsexportedfromIndia toSingaporeorMalaysiamaybeconsumed locallyandothersmaybere-exportedbacktoIndia,tootherASEANmemberstates,ortootherpartsoftheworld.
65
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
11/39
ofprimarycommodityprice increases, thesection furtherconsiders theproportionsofmachineryintheASEANstradeinmanufacturedgoodswithIndia.
3-1. ByIndustry:AllCommoditiesAsnapshotof the trend in theASEANs totalmerchandiseexportsto India in the
years1990,1995,and2000-2009isprovidedinFigure3. Thestackedbarchartshowsexportvaluesbyindustry,eachindustryisrepresentedbyadifferentcolor.4 ThesolidlinechartshowstheproportionsofmachineryintheASEANstotalmerchandiseexportstoIndia,andthedashedlinechartshowsthecorrespondingpercentagesofmanufacturedgoodsincludingmachinery. AsubstantialportionoftheASEANstotalmerchandiseexportstoIndiahasbeenaccountedforbymachinerythroughouttheperiodofinterest. Asshownbythesolidlinechart,themachineryssharehashoveredaround35%overthelastdecade. In2009,onethird(32.6%)oftheASEANstotalmerchandiseexportstoIndiawereaccountedforbymachinery. Meanwhile,machinerygoodsconstitutedmore thanhalfof theASEANsexportsofmanufacturedgoodstoIndia,whichaccountedfor56.8%ofthetotalmerchandiseexports.
4 TheindustryclassificationappliedthroughoutthischapterisexplainedinAppendixA.1.
66
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
12/39
Figure3: IndustryCompositionoftheASEANsTotalMerchandiseExportstoIndia
Source: UNComtrade(exportstatistics forallcommoditiesreportedbytheASEANmemberstates,variousversionsoftheHSclassification).
67
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
13/39
Forareference,thetableintheupperleftpartofFigure3showstheproportionsofmachineryintheASEANstotalmerchandiseexportsto theworldandthoseinIndiastotalmerchandise imports from theworld in1990,2000,and2009. ThemachinerysshareintheASEANsexports toIndia islimitedcomparedtotheASEANsexportstotheworld,butishigherthanintheIndiasimportsfromtheworld. In2009,themachinerysshareintheASEANsexportstoIndia(32.6%)wasatthelevelintermediatebetweentheASEANsexportstotheworld(44.0%)andtheIndiasimportsfromtheworld(24.0%).
Duetocrudeoilpriceincreases,theASEANsexportsofmineralsandmineralproductstoIndiahaveincreasedlargelyintermsofvaluesince2004. Likewise,reflectingtheworldwidefoodpriceincreasessince2007,therewasasignificantincreaseinthevalueoftheASEANsexportsofanimals,plants,andfoodstoIndia. Inspiteoftheincreasedexportvaluesofmineralsandmineralproductsandthatofanimals,plants,and foods, it isnoteworthy that theASEANsmachineryexports to Indiahaveincreasedcontinuouslysince2002,afterinternetbubble,andthemachineryssharehasremainedsteadyataround35%.
Figure4providesasnapshotofthetrendintheASEANstotalmerchandiseimportsfromIndia,followingthesameformatasFigure3. TheproportionofmachineryintheASEANstotalmerchandiseimportsfromIndiareachedapeakat23.7%in2001intimesofinternetbubble. Afterhoveringaround11%forafewyears,themachineryssharehasdoubled from9.8% in2005 to19.3% in2009.In the faceofcrudeoilprice increasesandworldwide foodprice increases, theASEANs importsofmachineryfromIndiahaveincreasedsignificantlyafterinternetbubble,atapaceexceedingtheincreaseintheimportsofotherindustries. In2009,onefifth(19.3%)of
68
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
14/39
theASEANstotalmerchandiseimportsfrom IndiawereaccountedforbymachinerythoughthemachinerysshareisstilllimitedcomparedtotheASEANsexportside.MachinerygoodsconstitutedonethirdoftheASEANsimportsofmanufacturedgoodsfromIndia,whichaccountedfor60.0%ofthetotalmerchandiseimports.
Figure4: IndustryCompositionoftheASEANsTotalMerchandiseImportsfromIndia
Source: UNComtrade(importstatisticsforallcommoditiesreportedbytheASEANmemberstates,variousversionsoftheHSclassification).
ComparedtotheASEANsexportside,theproportionofmachineryintheASEANstotalmerchandiseimportsfromIndiaisfarbelowthemachinerysshareintheASEANsimportsfromtheworld,butisslightlyhigherthaninIndiasexportstotheworld. In2009,themachinerysshareintheASEANsimportsfromIndia(19.3%)waslessthanhalfthatintheASEANsimportsfromtheworld(45.5%),butwasslightly
69
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
15/39
abovethatinIndiasexportstotheworld(16.9%).In2005, therewasanoticeablesurge in theproportionofmanufacturedgoods in
theASEANstotalmerchandiseimportsfromIndia,whichwasattributedtoasharpincrease inSingapores importsof lightmanufacturedgoods from India. Tobemoreprecise,Singaporesharplyincreasedimportsofnon-industrialdiamonds(jewelry)workedbutnotmountedorset(No.7102.39 in theHS1996classification)fromIndiain2005. Andthenin2006,SingaporesimportsofjewelryfromIndiareturnedtothesamelevelasin2004.5 Interestingly,SingaporesjewelryexportstotheUAEincreasedsharplyonlyin2005whileneitherIndiasjewelryexportstotheworldnorSingaporesjewelryimportsfromtheworldexperiencedsuchasharpincrease. ItappearsthatIndiashippedjewelrytoSingaporeinordertosupplytotheultimatedestinationmarketoftheUAEonlyin2005thoughwecannotexaminesuchapossibilitybecausedataforre-exportsbySingaporearenotavailable.6
3-2. MachineryasaShareofTradeinManufacturedGoodsExcluding thepossibleeffectson the tradevaluesofcrudeoilprice increasesand
worldwidefoodpriceincreases,thissubsectionfurtherexaminesrelativeimportanceofmachineryintradebetweentheASEANandIndia,byfocusingonexportsandimportsofmanufacturedgoods. ThesolidlinechartsinFigures3and4aremodifiedandcombinedintoFigure5. TheblueboldlinechartshowstheproportionsofmachineryintheASEANsexportsofmanufacturedgoodstoIndia,andthebluethinlinechart5 Duetothescarcityofthequantitydata,wecannotevaluatetheeffectsofdiamondpriceincreases.Also,thesurgeinSingaporesjewelry importsfromIndiawasnottheresultof theIndia-SingaporeComprehensiveEconomicCooperationAgreement(CECA)becauseSingaporesMNFtariffongoodsclassifiedunderthecategoryNo.7102.39hadalreadybeenzerobeforeitseffectuation.6 Note,however,thatIndiasjewelryexportstotheUAEratherincreasedin2005.
70
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
16/39
showsthepercentagesofmachinerypartsonly.7 Machineryasshownbytheblueboldlineincludesbothmachinerypartsandcomponentsandfinishedmachineryproducts.TheredlinechartsshowthecorrespondingpercentagesfortheASEANsimportsofmanufacturedgoodsfromIndia.
7 Forthedetailsonthedefinitionofmachinerypartsandcomponents,seeAppendixA.1.
71
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
17/39
Figure5: MachineryasaShareofTotalExportsandImportsofManufacturedGoods:TheASEANsExportstoandImportsfromIndia
Source: UNComtrade(exportandimportstatisticsformanufacturedgoods(HS28-92)reportedbytheASEANmemberstates,variousversionsoftheHSclassification).
72
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
18/39
IntheASEANsexportsofmanufacturedgoodstoIndia,theproportionofmachinerypartshasincreasedgraduallyespeciallyinthelastseveralyearswhilethepercentageofmachineryasawholehashoveredaround57%overthelastdecade. In2009,57.4%of theASEANsexportsofmanufacturedgoods to Indiawereaccountedforbymachinery,andabout two thirdof those,36.1%of theexportsofmanufacturedgoodsweremachineryparts. FortheASEANsimportside,theincreaseanddecreaseinthemachinerysshareintimesofinternetbubblewerelargelyduetothoseinthepercentageofmachineryparts. Morenoteworthyisarapidincreaseinthemachineryssharesince2005asaturningpoint.8 Meanwhile,thepercentageofmachinerypartshasremainedsteadyoverthelastseveralyears. Sincethegapbetweentheboldandthinlinesequalstothepercentageoffinishedmachineryproducts,theASEANhassignificantlyincreasedrelativeimportanceofitsimportsoffinishedmachineryproductsfromIndia. Thepercentageoffinishedmachineryproductshasquadrupledfrom5.4%in2005to20.9%in2009.
Theincreasedrelativeimportanceofmachineryparts in theASEANsexportsofmanufacturedgoods toIndiaandthatoffinishedmachineryproductsfortheASEANsimportsidearecommonfeaturessharedamong theASEANmemberstates. Figure6showstheproportionsofmachineryintheASEANmemberstatesexportsandimportsofmanufacturedgoodstoandfromIndiain1990and2009. ThebluestackedbarsindicatethepercentagesofmachineryintheexportsofmanufacturedgoodstoIndiaforeachASEANmemberstate,and the redbarsshow the importside. Forboth the redandbluebars,thedarkcoloredportionsrepresentthepercentagesaccountedforbymachinerypartsandthelightcoloredportionsforfinishedmachineryproducts.8 NotethatSingaporesjewelryimportsfromIndiasurgedin2005,whichpusheddownthepercentageofmachineryintheASEANsimportsofmanufacturedgoodsfromIndia.
73
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
19/39
Figure6: MachineryasaShareofTotalExportsandImportsofManufacturedGoods:TheASEANMemberStatesExportstoandImportsfromIndia
Source: UNComtrade(exportandimportstatisticsformanufacturedgoods(HS28-92)reportedbytheASEANmemberstates,variousversionsoftheHSclassification).
74
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
20/39
Bycomparingthestackedbarsbetweentheyears1990and2009,itisapparentthateachof theASEANmember stateshas increased relative importanceof itsexportsofmachinerypartstoanditsimportsoffinishedmachineryproductsfromIndia,withtheexceptionofMalaysiasimports. Inaddition,theproportionsofmachineryasawholehaveincreasedsimultaneouslyfortheASEANmemberstatesexportstoandimportsfromIndiainthelasttwodecades,withtheexceptionofMalaysiaandSingaporesimports.
4.ASEANSMACHINERYEXPORTSTOANDIMPORTSFROMINDIAFocusingontheASEANstradeinmachinerywithIndia,thissectionlooksintothe
ASEANmemberstatestakingpartinthemachineryexportstoandimportsfromIndia.ThesectionalsobreaksdowntheASEANsmachineryexportstoandimportsfromIndiabymachinerysubsector.
4-1. ByCountryandTypeofGoodsFigure7overviewsthetrendinthevalueoftheASEANsexportsofmachineryto
Indiabycountryandbythetypeofgoods,i.e.machinerypartsandcomponentsandfinishedmachineryproducts. Thedarkcoloredportions,regardlessofblueorred,representtheexportvaluesofmachinerypartsandcomponentsandthelightcoloredportionsforfinishedmachineryproducts. Theareachart indicates thatSingaporehasbeenaleadingexporterintheASEANsmachineryexportstoIndiaoverthelasttwodecades,withasignificantincreaseintheexportvalueofmachinerypartsinthelastseveralyears.SingaporeisfollowedbyMalaysiaandThailand. Therewerenoticeable
75
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
21/39
increasesintheexportvaluesofbothmachinerypartsandfinishedmachineryproductsforthosetwocountriessince2002. ThemachineryexportsbyotherASEANmemberstatestoIndiaarenegligibleamountofvalue.
Figure8providestheareachartfortheASEANsimportsofmachineryfromIndiabycountryandbythetypeofgoods. Asintheexportside,SingaporehasbeenaleadingimporterintheASEANsmachineryimportsfromIndiaoverthelasttwodecade. Itshouldbenoted,however,thatIndonesiasimportsoffinishedmachineryproductsfromIndiahas increasedrapidlysince2006andexceededSingapore invaluein2009. NotonlyIndonesiabutalsoSingapore,Thailand,Malaysia,andVietNamhaveexperiencedtheincreaseintheimportvalueoffinishedmachineryproductssince2005-2006. Incontrast,theimportvaluesofmachinerypartshaveremainedlargelyunchangedforalltheASEANmemberstates,exceptthatthepartsimportsbySingaporeandMalaysiaincreasedanddecreasedintimesofinternetbubble.
76
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
22/39
Figure7: ExporterCountryCompositionoftheASEANsMachineryExportstoIndia
Source: UNComtrade(exportstatisticsformachinery(HS84-92)reportedbytheASEANmemberstates,variousversionsoftheHSclassification
77
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
23/39
Figure8: ImporterCountryCompositionoftheASEANsMachineryImportsfromIndia
Source: UNComtrade(importstatisticsformachinery(HS84-92)reportedbytheASEANmemberstates,variousversionsoftheHSclassification).
78
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
24/39
4-2. BySectorandTypeofGoodsAswithFigure7,theareachartofFigure9alsoshowsthetrendinthevalueofthe
ASEANsexportsofmachinerytoIndia,butbymachinerysubsectorandbythetypeofgoods.
9 Thedarkcoloredportionsaremachinerypartsandcomponents,andthelightcoloredportionsarefinishedmachineryproducts,asbefore. Machineryisdividedintofoursubsectors,namely,generalmachinery(HS84),electricmachinery(HS85),transportequipment(HS86-89),andprecisionmachinery(HS90-92)sectors. TheexportvaluesofgoodsclassifiedundertheparticularHScommoditycodesareexcludedfromrelevantsubsectorsandarehighlightedas independentareasinordertolookintothetrendintheASEANsmachineryexportstoIndia.
9 Toexaminechangesinthecommoditycompositionofexportsovertime,ideallywewouldliketousetradedatabasedonasingleconstantcommodityclassification,whichenablesusnottoconcernaboutthecensoringissueemergingfromthecomplicatedmergersandbranchingofcodesduetotheupdateofclassification. Forthisareachart,IthereforeusedexportstatisticsreportedaccordingtotheHS1992classification,theoldestversion. ThesameappliestoFigure10.
79
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
25/39
Figure9: ProductCompositionoftheASEANsMachineryExportstoIndia
Source: UNComtrade(exportstatistics formachinery(HS84-92)reportedbytheASEANmemberstates,theHS1992classification)
80
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
26/39
Generalmachinerysector(HS84),followedbyelectricmachinerysector(HS85),hasbeendominantintheASEANsexportsofmachinerytoIndiaandhasincreasedconstantlysince2002,afterinternetbubble. Behindthisdominanceofgeneralmachinerysector,thecommoditycodeNo.8473.30(partsandaccessoriesofcomputers)hasrankedfirstintheexportvalueattheHS6-digitlevelthroughoutthesampleperiodexcepttheyear1990,inwhichNo.8473.30rankedsecondafterNo.8471.93(computerdatastorageunits,whichareclassifiedasfinishedproducts).10 Fortheelectricmachinerysector,electronicintegratedcircuitshavebeenmajorexportedgoods. Intheareachart,IunitedthreecommoditycodesofNo.8542.11,8542.19,and8542.20intoanorangeportionlabeledaselectronicintegratedcircuits.11 Unlikewithgeneralmachineryandelectricmachinery sectors,transportequipment(HS86-89)andprecisionmachinery(HS90-92)sectorsarestilllimitedtonegligibleamountinvalue,regardlessofpartsorfinishedproducts.
Forfurtherreference,Table2looksatthedetailsofmajormachinerygoodsexportedbytheASEANmemberstatestoIndiain2009. Goodsarelistedindescendingorderofvaluebycountry,andthelistfocusesontheHS6-digitcommoditycodes,eachofwhichaccountsformorethan10%ofthecountrysmachineryexportstoIndia. OnlySingapore,Malaysia,andThailandare included in the listbecause,as isclearfromFigure7,theotherASEANmemberstatesarenegligibleintheASEANs10 No.8473.30 isdefinedaspartsandaccessoriesofthemachinesof theheadingNo.84.71,i.e.automaticdataprocessingmachines(computers). Morespecifically,No.84.71isdefinedasautomaticdataprocessingmachinesandunitsthereof;magneticoropticalreaders,machinesfortranscribingdataontodatamediaincodedformandmachinesforprocessingsuchdata,notelsewherespecifiedorincluded.11 No.8542.11,8542.19,and8542.20isdefinedasmonolithicintegratedcircuits,digital;monolithicdigitalintegratedcircuits,exceptdigital;andhybridintegratedcircuits;respectively.Althoughelectronic integratedcircuitsareclassifiedunder theheadingNo.85.42regardlessof theversionoftheHSclassification,therehavebeencomplicatedmergersandbranchingofcodesatthe6-digit level. Iunited the threecodes soas toavoidpossiblymisclassifieddatadue toconfusionoverthechangesinthecommodityclassification.
81
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
27/39
totalmachineryexportstoIndia. Fortheleadingexporter,Singapore,electronicintegratedcircuits(No.8542.11/8542.19/8542.20)andpartsandaccessoriesofcomputers(No.8473.30)rankedfirstandsecond,respectively,andthetoptwogoodsaccountedforonefourthofSingaporesmachineryexportstoIndia. TheleadinggoodswerecomputerpartsandaccessoriesforMalaysiaandelectricintegratedcircuitsforThailand,whichsuggeststhatthereisthecompartmentalizationofmachinerysubsectorsbetweenthetwocountries.
Table2: MajorMachineryExportsfromASEANtoIndia(2009)
Country HScodesintheHS1992classification
Commoditydescription Type
Value(millionUS$,
constant2005)
Shareofthecountrysmachinery
exportstoIndiaSingapore No.8542.11
/8542.19 ElectronicIC Parts 692 14%No.8473.30 Partsandaccessories
ofautomaticdataprocessingmachines(computers)
Malaysia No.8473.30 Partsandaccessoriesofautomaticdataprocessingmachines(computers)
No.8471.20 DigitalcomputerswithCPUandinput-outputunits
No.8540.11 Colorcathode-raytelevisionpicture(includingvideomonitor)tubes
Parts 501 10%Parts 186 19%
Products 115 11%Parts 105 10%
Thailand No.8542.11/8542.19 ElectronicIC Parts 129 11%No.8408.20 Engines,diesel,for Parts 117 10%
motorvehiclesofChapter87
Note: NogoodsclassifiedunderthecategoryNo.8542.20areexportedbySingaporeorThailandtoIndiain2009
Source: UNComtrade(exportstatisticsformachinery(HS84-92)reportedbytheASEANmemberstates,theHS1992classification).
82
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
28/39
Figure10correspondstoFigure8andshowsthetrendinthevalueoftheASEANsimportsofmachineryfromIndiabymachinerysubsectorandby thetypeofgoods. TherearetwonoticeablechangesintheASEANsmachineryimportsfromIndiainthelasttwodecades. First,theincreaseanddecreaseoftheASEANsmachineryimportsfromIndiaintimesofinternetbubblewereduesolelytotheincreaseanddecreaseintheimportsofpartsandaccessoriesofcomputers(No.8473.30).CombinedwiththeobservedfactfromFigure8,itappearsthatSingaporeandMalaysiaengagedintheseincreasedanddecreasedimportsofcomputerpartsandaccessories.Second,theincreaseintheASEANsimportsoffinishedmachineryproductsfromIndiasince2005wasduelargelytoadramaticincreaseinasinglecommoditycodeofNo.8525.20(transmit-receiveapparatus),whichincludesmobilephones.12 Besidesthesurgeintheimportsofmobilephones,theASEANsimportsoffinishedproductsoftransportequipment (HS86-89) from Indiahave increased significantly in the last fewyears.
12 No.8525.20isdefinedastransmissionapparatusincorporatingreceptionapparatus,whichincludestelephonesforcellularnetworksorforotherwirelessnetworks(No.8517.12intheHS2007classification,thelatestversion),i.e.mobilephones.
83
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
29/39
Figure10: ProductCompositionoftheASEANsMachineryImportsfromIndia
Source: UNComtrade(importstatisticsformachinery(HS84-92)reportedbytheASEANmemberstates,theHS1992classification)
84
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
30/39
ThedetailsofmajormachinerygoodsimportedbytheASEANmemberstatesfromIndiain2009areprovidedinTable3. Transmit-receiveapparatusincludingmobilephones(No.8525.20)rankedfirstforallthenon-negligibleimporters,namely,Singapore, Indonesia,Thailand,Malaysia,andVietNam. Inparticular,more thanhalf(56.6%)ofIndonesiasmachineryimportsfromIndiawereaccountedforbymobilephones. Similarly,mobilephonesconstitutedasubstantialportionofthemachineryimportsbyVietNam,Thailand,andSingapore. Besidesmobilephones,large-scalevehicleswerehighlyranked,suchasdieselpoweredtrucks(No.8704.23)forSingapore,dumptrucks(No.8704.10)forIndonesia,andcargovessels(No.8901.90)forVietNam.
Thesurge in theASEANs importsof transmit-receiveapparatus includingmobilephonesfromIndia isfurtherexamined inFigure11. FromtheASEANsperspective,theproportionof Indiaasoriginof its importsofmobilephoneshasincreasedsharplyfrom0.1%in2005to10.2%in2009. Andin2009,almosthalf(48.8%)oftheASEANsmobilephones imports fromIndiaweredestined for Indonesia, followedbySingapore(21.0%)andThailand(16.1%). Piecingtogethertheseobservedfacts,itwouldappearthatNokiaIndiahasgreatlyaffectedthesurgeintheASEANsmobilephonesimportsfromIndia.
85
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
31/39
Table3: MajorMachineryGoodsImportedbytheASEANMemberStatesfromIndiain2009
CountryHScodesintheHS1992classification
Commoditydescription TypeValue
(millionUS$,constant
2005)
Shareofthecountrys
machineryimportsfromIndia
Singapore
No.8525.20
Transmit-receive
apparatus,
including
mobile
Products
163
21%
phones
No.8704.23 Dieselpoweredtrucksweighing>20t Products 77 10%Indonesia No.8525.20 Transmit-receiveapparatus,includingmobile Products 379 57%
phonesNo.8704.10 Dumptrucksdesignedforoff-highwayuse Products 72 11%
Thailand No.8525.20 Transmit-receiveapparatus,includingmobile Products 125 32%phones
No.8708.40 Transmissionsformotorvehicles Parts 58 15%Malaysia No.8525.20 Transmit-receiveapparatus,includingmobile
phonesVietNam No.8525.20 Transmit-receiveapparatus,includingmobile
Products 30 11%Products 101 42%
phonesNo.8901.90 Cargovesselsotherthantankerorrefrigerated Products 75 31%
Source: UNComtrade(importstatisticsformachinery(HS84-92)reportedbytheASEANmemberstates,theHS1992classification).
86
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
32/39
Figure11: TopImportOriginsoftheASEANsImportsofTransmit-receiveApparatus(No.8525.20)
Source: UNComtrade(importstatisticsreportedbytheASEANmemberstates,theHS1992classification)
Nokiasetup itsmobiledevicemanufacturing facility (NokiaTelecomSEZPark)inChennai,India,inJanuary2006. NokiawasthefirstglobaltelecomcompanytolaunchamanufacturingplantformobilephonehandsetsinIndia. Initiallyaimedtoserve thedemandsof the rapidlygrowing Indiasdomesticmarket,approximatelyhalfof thecurrentproductionof theNokiasChennai facilitiesconsumeddomesticallyandtherestisexportedto100countriescoveringsixcontinents.13 Indonesiahasbeen13 OnMay5,2011,NokiaannouncedthatitsmanufacturingfacilityatChennaihasachievedproductionof500millionmobilephonehandsetsafterfiveyearsofitsoperations.NokiasChennaifacility
isbased
on
the
Nokias
global
standards
and
can
manage
the
production
ofall
types
of
Nokiashandsetsfromlow-endtohigh-endphones. Formoreinformation,seethewebpageof
87
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
33/39
rankedasoneofthetop10majormarketsofNokia,intermsofnetsales,inspiteofthefactthatNokiahasnomobiledevicemanufacturingfacilityinIndonesia. Onanotherfront,inIndonesia,Nokiahasthelargestmarketshare,about60%,formobilephonesales.
5.CONCLUSIONThischapterhasoverviewedthedevelopmentandcurrentstatusoftradein
machinerybetweentheASEANandIndia. Theobservedfactsaresummarizedasfollows. First,therelativeimportanceoftheASEANasdestinationofIndiasexportsofmachineryhasnearlydoubledoverthelastfewyears;in2009,almostonefifthofIndiasmachineryexportswereshippedtotheASEAN. Second,theproportionofmachineryintheASEANstotalimportsfrom IndiahasdoubledoverthelastseveralyearsthoughnotuptothelevelofthemachineryssharefortheASEANsexportside.TheincreaseinthemachineryssharewasduesolelytotheincreasedimportsoffinishedmachineryproductsbytheASEANfromIndia. Meanwhile,intheASEANsexportstoIndia,theproportionofmachinerypartshasgraduallyincreasedoverthelastdecade. Third,theASEANmemberstatescenteringonSingaporehavebecometoexportmoremachinerypartsincludingcomputerpartsandaccessoriesandelectricintegratedcircuitstoIndia. Ontheotherhand,theASEANmemberstateshavesignificantlyincreasedimportsoffinishedmachineryproductsincludingmobilephonesfromIndiainthelastseveralyears,whichisespeciallytrueforIndonesiaandNokiaIndia:http://www.nokia.co.in/about-nokia/company/manufacturing-in-india.
88
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
34/39
Singapore.WhatisinterestingaboutthelastpointisthattheNokiaslaunchofmobiledevice
manufacturingfacilityinIndiaappearstogreatlyaffectthevolumeoftransactionsbetweenIndiaandtheASEANmemberstates. Theglobalproductionstrategyofasinglecompanycouldshapetradepatternsbetweentwocountrieswithweaktraderelationships. SuchaNokias impacton theASEANsmachinery imports from IndiawouldsuggestthatdevelopingeconomieslikeIndiaultimatelyneedtotakeseriousandeffectivemeasurestoattractforeignfirmsinordertoenhancetraderelationswithothercountries. Indeed,onitswebpage,NokiaIndiaannouncedhighexpectationsregardinginvestmentclimateinChennai. Duetotheavailabilityofskilledlabor,supportfromthestategovernment,andtheexistenceofgoodlogisticsconnections,ChennaiwasselectedasthelocationfortheNokiasmanufacturingfacility. InadditiontohavingagreatimpactonIndiasexportsofmobilephonestotheASEAN,theNokiaslaunchofmobiledevicemanufacturingfacilityappearstoserveasthecatalystforindustrialdevelopment inChennai. OtherelectronicmanufacturingcompanieshaveannouncedtoplantoinvestinChennaisincetheNokiaslaunch. Inthemeantime,theNokiaTelecomSEZParkhousesfiveglobalcomponentsuppliersasofMay2011,creatingemploymentopportunitiesexceeding25,000. Domesticcomponentsuppliersandserviceprovidersarealsoexpected to takepart inandgainbenefit from thisemergingindustrialagglomeration.
89
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
35/39
APPENDIX
A1. DatadescriptionIusedinternationaltradedata,obtainedfromtheUNComtradeonlinedatabase,at
the6-digitleveloftheHarmonizedSystem(HS)commodityclassification,whichisthemostdetaileddisaggregatedleveloftradedatathatisbothinternationallycomparableandpubliclyavailable. AttheHS6-digitlevel,sincetheannualdatabelow$500(currentUS$)arenotreportedbefore2000,tradeflowsbelow$500aretreatedasiftherewasnotradeatallforalltheyearsinthesample. Afterthecutoffvalueof$500isapplied,all tradedataaredeflatedby theconsumerprice index (CPI) in theUnitedStatestoobtainaconstantdollarseries. VersionsoftheHSclassificationvarybycountryandbyyear(seeTableA1). Basically,IuseddatabasedonthelatestversionoftheHSclassificationasreportedintheUNComtrade.
AsforthePhilippinesexportsandimportsin1990and1995andVietNamsexportsandimportsin1990,1995,and2009,Iusedmirrordatawithappropriatemodification. Forexample,toestimatethevalueofbilateralimportsbythePhilippines,theobservedvalueofthecorrespondingbilateralexportsbythetradecounterpartismultipliedby1.05. Themultiplier1.05isemployedasaproxytoadjustexportvaluesonanf.o.b.basistoimportvaluesonac.i.f.basis,followingAndo(2006).
Asfortheindustryclassification,theHS2-digittarifflinesareclassifiedintosevenbroadcategories. Theaggregatedseven industries includeanimals,plants,and foods(HS1-24);mineralsandmineralproducts (HS25-27);chemicalsandchemicalproducts(HS28-40);lightmanufacturedgoods(HS41-71);metalsandmetalproducts(HS72-83);machinery(HS84-92);andotherproducts(HS93-97). Thedetailsoftheindustry
90
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
36/39
classificationaresummarizedinTableA2.ManufacturedgoodsrangefromHS28toHS92.
91
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
37/39
TableA1: VersionsoftheHSClassificationEmployedbytheASEANMemberStatesandIndia1900 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Indonesia HS1992HS1992HS1996 HS1996 HS1996 HS1996 HS1996HS1996 HS1996 HS1996 HS1996 HS1996Malaysia HS1992HS1992HS1996 HS1996 HS2002 HS2002 HS2002HS2002 HS2002 HS2002 HS2002 HS2007Philippines .. .. HS1996 HS1996 HS1996 HS1996 HS1996HS1996 HS1996 HS2002 HS2002 HS2002Singapore
HS1992
HS1992
HS1996
HS1996
HS2002
HS2002
HS2002
HS2002
HS2002
HS2007
HS2007
HS2007
VietNam .. .. HS1996 HS1996 HS1996 HS1996 HS2002HS2002 HS2002 HS2002 HS2007 ..Thailand HS1992HS1992HS1996 HS1996 HS2002 HS2002 HS2002HS2002 HS2002 HS2007 HS2007 HS2007India HS1992HS1992HS1996 HS1996 HS1996 HS2002 HS2002HS2002 HS2002 HS2002 HS2002 HS2007Source: UNComtrade
92
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
38/39
TableA2: IndustryClassificationbasedontheHSClassificationCategoryofindustry Subcategories
Animals,plantsandfoods(HS1-24)
Mineralsandmineralproducts(HS25-27)Chemicalsandchemicalproducts(HS28-40)Lightmanufacturedgoods(HS41-71)
Liveanimals;edibleproductsofanimalorigin(HS1-5)Liveplants;ediblevegetablesandfruits;vegetableproducts(HS6-14)Animalorvegetablefatsandoils(HS15)Ediblepreparations;beverages;tobacco(HS16-24)
Chemicalsandchemicalproducts(HS28-38)Plasticsandarticlesthereof;rubberandarticlesthereof(HS39-40)Rawhidesandskins;leatherandarticlesthereof;furskinsandfurproducts(HS41-43)Woodandarticlesthereof;woodcharcoal;corkandarticlesthereof;strawandespartoproducts(HS44-46)Pulp,paper,andpaperboardandarticlesthereof;productsofprintingindustry(HS47-49)Textilefibers;yarn;textileandwovenfabrics;articlesofapparelandclothingaccessories(HS50-63)Footwear;headgear;umbrellasandsticks(HS64-67)Articlesofstone,plaster,cement,asbestosandmica;ceramicproducts;glassandglassware(HS68-70)Naturalorculturedpearls,preciousorsemi-preciousstones(HS71)
Categoryofindustry SubcategoriesMetalsandmetalproducts(HS72-83)Machinery(HS84-92) Machineryandmechanicalappliancesandpartsthereof;electrical
machineryandequipmentandpartsthereof(HS84-85)Vehiclesandpartsthereof;aircraft,spacecraft,andpartsthereof;ships,boatsandfloatingstructures(HS86-89)Optical,photographic,cinematographic,measuring,checking,precision,medicalinstruments;clocksandwatchesandpartsthereof;musicalinstrumentsandpartsandaccessoriesthereof(HS90-92)
Otherproducts(HS93-97) Armsandammunitionandpartsandaccessoriesthereof(HS93)Miscellaneousmanufacturedarticles(HS94-96)Worksofart,collectorspiecesandantiques(HS97)
Source:UNComtrade
93
7/28/2019 CHAPTER 2 Development and Current Status of Machinery Trade Between ASEAN and India
39/39
Machineryhereincludesallthegoodsclassifiedaspartofgeneralmachinery(HS84),electricmachinery(HS85),transportequipment(HS86-89),andprecisionmachinery(HS90-92)sectors.Forthisproductgroup,wegroupedtheHScommoditycodesintopartsandcomponentsandfinishedproducts.Asforthedefinitionofmachinerypartsandcomponentsappliedhere,seeKimuraandObashi(2010). KimuraandObashiprovide the listsofmachinerypartsandcomponentsat theHS4-digitand6-digitlevelsforvariousversionsoftheHSclassification,whicharethemodifiedversionsofthelistoriginallyproposedbyAndoandKimura(2005).
REFERENCES
Ando,Mitsuyo(2006). FragmentationandVerticalIntra-industryTradeinEastAsia.TheNorthAmericanJournalofEconomicsandFinance17,No.3:257-81.
Ando,Mitsuyo,andFukunariKimura(2005).TheFormationofInternationalProductionandDistributionNetworksinEastAsia.InInternationalTradeinEastAsia,ed.TakatoshiItoandAndrewRose.Chicago:UniversityofChicagoPress.
Kimura,Fukunari,andAyakoObashi(2010). InternationalProductionNetworksinMachineryIndustries:StructureandItsEvolution.ERIADiscussionPaperSeriesNo.2010-09,Jakarta:ERIA.