Bilateral trade in focus ahead of PM Modi's Indonesia visit: Report
New Delhi, July 6
Prime Minister Narendra Modi's visit to Indonesia is expected to focus on strengthening economic ties, even as bilateral merchandise trade has declined over the past three financial years.
According to a Rubix Data Sciences trade outlook report, bilateral goods trade fell from USD 38.8 billion in FY2023 to USD 24.8 billion in FY2026.
Trade and investment are expected to be key areas of discussion during Prime Minister Modi's July 6-11 visit to Indonesia. The visit follows the 8th India-Indonesia Joint Commission Meeting held in New Delhi last month.
The report said overall bilateral goods trade registered a compound annual growth rate (CAGR) of minus 14 per cent during the period, mainly due to falling exports and moderating imports.
India's exports to Indonesia declined from USD 10 billion in FY2023 to USD 4.5 billion in FY2026, recording a CAGR of minus 23 per cent.
"India's goods exports to Indonesia fell from USD 10.0 billion (FY2023) to USD 4.5 billion (FY2026), more than halving over the period, with a steep CAGR of -23%, reflecting sustained export weakness," the report said.
Imports from Indonesia also declined, falling from USD 28.8 billion in FY2023 to USD 20.3 billion in FY2026, at a CAGR of minus 11 per cent.
"Imports from Indonesia declined from USD 28.8 billion to USD 20.3 billion, with a CAGR of -11%, indicating that import demand has also fallen but at a relatively slower pace than export demand," the report added.
The report said India's trade deficit with Indonesia narrowed from USD 18.8 billion in FY2023 to USD 15.8 billion in FY2026, although the imbalance remains significant.
Despite the decline in trade, Indonesia remains one of India's key economic partners in Southeast Asia. ASEAN accounted for around 11 per cent of India's total merchandise trade in FY2026, with Indonesia remaining India's second-largest merchandise trading partner within the bloc.
The report said the Joint Commission Meeting held in June 2026 focused on expanding cooperation in trade, maritime security, defence, digital connectivity, health and critical minerals.
It also noted changes in the composition of bilateral trade. India's exports to Indonesia have become more diversified, with the share of refined petroleum products declining, while exports of frozen bovine meat, auto components, groundnuts and unmanufactured tobacco have increased.
The report said India's export basket is gradually shifting from energy products towards agricultural and industrial goods.
On the import side, coal and palm oil continued to dominate India's imports from Indonesia. Indonesia remained India's largest supplier of palm oil, accounting for around 40 per cent of India's palm oil imports in FY2026, while imports remained largely commodity-driven despite gradual diversification, the report said.
— ANI
Reader Comments
The trade deficit narrowing from USD 18.8 billion to USD 15.8 billion is a silver lining, but we're still importing way too much from Indonesia - mainly coal and palm oil. Why can't we boost our own palm oil production? We have the land and climate in states like Andhra and Telangana. Need more self-reliance in critical commodities.
Interesting read. The -14% CAGR in bilateral trade is stark. But the shift from energy exports to agricultural goods (groundnuts, tobacco) and industrial items (auto components) shows India is moving up the value chain. Indonesia is a critical partner in ASEAN. Hope Modi's visit focuses on services trade too - IT and fintech could be game-changers.
I'm cautiously optimistic. The decline in exports from USD 10 billion to USD 4.5 billion is alarming - more than halved! But the diversification is good. We shouldn't rely on petroleum products alone. Also, the report mentioning maritime security and defence cooperation - that's crucial given China's assertiveness in the region. Time to strengthen ties with Jakarta.
Honestly, the numbers don't look great. Our exports have fallen 55% from FY2023 to FY2026. Even though the deficit narrowed, it's largely because imports fell too - not because of export growth. We need more aggressive trade agreements and better market access. PM Modi should push for a comprehensive FTA with Indonesia, not just talk. Action required!
Important trip. Indonesia is India's second-largest trading partner in ASEAN.
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