It’s the fastest-growing major economy in the world with a population expected to surpass China within a decade, so why does India remain a relatively minor figure among New Zealand’s trade partners and what opportunities could be explored?
Leading academics and policy analysts from India, Singapore and Australia looked to answer such questions at a one-day international symposium on ‘Looking at India from the South Pacific’ that was organised by the New Zealand India Research Institute and hosted by Victoria University of Wellington.
India is currently ranked 11 on New Zealand’s list of trading partners and has a focus mainly on services, but there’s untapped potential in the fact the world’s largest democracy is also the second-largest producer of fruit and vegetables.
Perhaps unsurprisingly, then, during the symposium the agricultural sector was suggested as holding out the most promise for local businesses.
“Agriculture is the area that New Zealand has a comparative advantage in, in terms of agricultural technology and supply chains and logistics, and is a way New Zealand could create stronger trading ties with India,” said Dr Rajat Kathuria, Director and CEO of the Indian Council for Research on International Economic Relations.
Log and forestry products are the main items New Zealand exports to India for processing and exporting onward. Kiwifruit is another major export, but there is also the possibility of engaging with the Indian food processing sector, which Kathuria identified as under-utilised.
“India processes less than five percent of fruits and vegetables, but is one of the largest producers of fruit and vegetables in the world. This is a huge opportunity for countries like New Zealand,” he said.
Underscoring this potentially fertile area of trade is the Indian Government’s promise to double farmers’ income by 2022. Increasing minimum crop prices, improving irrigation and providing crop insurance are among the tools being used to achieve a goal that some have criticised as unrealistic and unachievable, but which Kathuria said “makes economic and political sense”.
“For the first time in India’s independent history, we are now focusing on agriculture. I think it’s important that farmers become the centre of policy, and this is the area where New Zealand and India can come together.”
An obstacle to developing a more long-lasting trade relationship is India’s apparent scepticism of free trade agreements – in spite of a desire for an open global economy and export markets – and the trade scuffles between the United States and China, which could have unforeseen consequences.
“Exports are important for any country of India’s size, but have not been focused on,” said Kathuria.
“India needs to invest in keeping markets open. It remains very competitive for services, but less so for manufacturing.”
The alternative to trading in goods is the development of a commercial relationship built on investment, partnerships with Indian companies and focusing on services such as travel – which comprises 97 percent of our service exports, with education-related travel making up the majority.
Personal travel to India makes up the majority of services imports from India.
“There’s a huge untapped potential here for the expansion of bilateral trade and investment between New Zealand and India,” said Kathuria, “and clearly an economy that has the potential to grow at eight percent per year has plenty of opportunities for a country like New Zealand.”
Read the original article on Newsroom.