Indonesia is the largest economy of the South East Asian region with a GDP of USD 1.1 trillion in 2019. With a population of around 270 million people. Indonesia offers a vast market with significant economic potential. The economy is characterised by strong social stability, improving domestic demand and a steadily increasing foreign reserve. The country located in South East Asia between the Indian and the Pacific Oceans has a very strategic location at one of the world’s major maritime trade routes. Additionally it also has abundant natural resources which offer significant economic potential to the country.
While the economy went through a crisis in 2020 on account of the pandemic, the economy quickly rebounded in 2021 offering an output higher than pre-pandemic levels. As per the Asian Development Bank, the economy is expected to grow by 5% in 2022 and 5.23% in 2023.
India and Indonesia have historically shared a warm diplomatic relationship. It has emerged as the second largest trading partner for India in the ASEAN region. Indonesia is an important component of India’s Act East Policy. Indonesia is also India’s second largest trade partner in the ASEAN region. The current economic relationship between India and ASEAN countries presents a multitude of industrial, commercial, and investment opportunities. The two countries have a total bilateral trade of around USD 26.17 billion in 2021-22
Indonesia features among the top 25 major export destinations for Indian engineering exports. During 2021-22, India’s total engineering exports to Indonesia was at USD 2.12 billion while India’s engineering imports from Indonesia during the same period was USD 2.22 billion indicating a nominal trade deficit for engineering sector.
In case of industrial machinery which is the focus sector of Manufacturing Indonesia 2022, India’s exports to Indonesia in 2021-22 was USD 366.46 million where as import was only USD 222.54 million.
The manufacturing sector is a very important component of Indonesian economy. According to data from the Indonesian government manufacturing sector contributed the largest to the national GDP in the second quarter of 2021, amounting to 17.34%. This is despite the hardships faced due to the COVID 19 pandemic. It is expected that the sector is set to become the driver of Indonesia’s economy in the coming days. Despite these achievements though, Indonesia is largely dependent on imported capital goods and machinery to support their manufacturing industry.
Hence there is significant scope for Indian companies especially in the capital goods and machinery sector to expand their presence in the Indonesian market and exhibitions such as Manufacturing Indonesia 2022 can facilitate this to a great extent.