India-Thailand Bilateral Trade and Investment
Thailand, the second-largest economy in ASEAN, has successfully transitioned from an agriculture-based economy to a diverse industrial and service-oriented one. India and Thailand share deep historical economic and cultural ties, which have been further strengthened by India’s “Act East” and Thailand’s “Act West” policies. These strategic initiatives have enhanced bilateral relations, positioning Thailand as a key regional partner in India’s engagement with ASEAN, BIMSTEC, Mekong Ganga Cooperation, and the Asia Cooperation Dialogue. In 2023, Thailand ranked India’s 4th largest trading partner within ASEAN.
India-Thailand bilateral trade
In June 2024, India exported US$369 million worth of goods to Thailand and imported US$921 million, resulting in a trade deficit of US$552 million.
Trade between the two countries increased from US$12.14 billion in 2019 to US$16.04 billion in 2023. In 2023, Thailand’s exports to India amounted to US$10.11 billion, while India’s exports to Thailand were US$5.92 billion.
India’s major exports to Thailand include jewelry (silver bars and gold), machinery and parts, metal waste, chemicals, vegetables, pharmaceutical products, aquatic animals, vehicle parts, iron and steel products, electrical machinery, and household appliances.
Thailand’s major exports to India include animal and vegetable fats, chemical products, polymers, precious stones, machinery, motor cars, copper, aluminum, data processing machines, air conditioning equipment, and rubber products.
India Imports from Thailand |
|
Items |
Value (US$) |
Electrical, electronic equipment |
1.64 billion |
Machinery, nuclear reactors, boilers |
1.62 billion |
Plastics |
1.36 billion |
Animal, and vegetable fats and oils, cleavage products |
895.33 million |
Organic chemicals |
769.64 million |
India Exports to Thailand |
|
Items |
Value (US$ million) |
Machinery, nuclear reactors, boilers |
$858.71 |
Pearls, precious stones, metals, coins |
$651.76 |
Fish, crustaceans, mollusks, aquatic invertebrates |
$325.48 |
Vehicles other than railways, tramways |
$269.22 |
Electrical, electronic equipment |
$237.86 |
Source: Trading Economics
Investments and commercial presence
Indian Investment in Thailand
Over the past few years, Indian investments in Thailand have shown varied trends, reflecting the growing economic relationship between the two countries. From an investment of US$23.38 million in 2019, Indian investments peaked at US$124.73 million in 2021 before decreasing to US$29.44 million in 2023, as per Thailand’s Board of Investment (BOI).
Major Indian Companies in Thailand |
|
Tata Steel Thailand |
Tata Consultancy Services |
Aditya Birla Group |
Tech Mahindra |
Kirloskar Brothers Ltd. Royal Enfield |
L&T (Larsen & Toubro) Bajaj Auto |
NRB Bearing |
Ranbaxy |
Camper Pharmaceuticals |
Coforge Ltd. |
Usha Siam Steel Industries PLC |
KEC International |
Kalpataru Power Transmission Ltd. |
Desmond International |
Apollo Tyres |
Rajasthan Thai Wire |
Growel Chemical |
DT Wiring Systems |
Monte Big drum |
Dee Piping Systems |
Kings Food & Beverage |
Triveni Turbines DMCC |
Innovative Gloves Co., Ltd. |
SRF Industries Thailand Ltd. |
Polyplex (Thailand) Public Co. Ltd. |
Flawless Co., Ltd. |
Sunflag (Thailand) Ltd. |
Jogani Group of Companies |
Atlantic Food Co. Ltd. |
|
Thai Investment in India
Thailand’s investment in India has been increasing in recent years, with significant growth in infrastructure, real estate, agro-processing, electronics, automotive, food processing, hospitality, and renewable energy. Notably, in 2021, Global Renewable Synergy Co., Ltd made the largest investment of US$453.29 million in India’s renewable energy sector. Between 2019 and 2023, Thailand’s FDI inflows into India saw significant variation, with 2021 witnessing the highest inflow at US$533.86 million.
Major Thai Companies in India |
|
Charoen Pokphand Group |
Allied Metals (Thailand) Co., Ltd. |
Italian Thai Development PCL |
Tong Garden Food Marketing Pvt. Ltd. |
The Thai Union Frozen Products PCL |
Rockworth PCL Ltd. |
Thai Summit Neel Auto Pvt. Ltd. |
SCG International |
Delta Electronics (Thailand) PCL |
Pranda Jewelry Pvt. Ltd. |
Srithai Superware PCL (Melamine tableware manufacturing) |
Krung Thai Bank PCL |
Siam Makro PCL |
Dutch Mill Thailand |
Magnolia Quality Development Corporation Limited |
Global Renewable Synergy Co. (GRSC) |
Dusit Group of Hotels |
SCG International |
Port Collaboration
India and Thailand are also focusing on enhancing direct port-to-port connectivity. In 2019, three Memorandums of Understanding (MoUs) were signed between Ranong Port (Thailand) and Indian ports in Visakhapatnam, Chennai, and Kolkata, further promoting trade and economic collaboration.
This growing partnership in investment, connectivity, and trade highlights the robust economic ties between India and Thailand, paving the way for deeper cooperation across multiple sectors.
DTAA
The Double Tax Avoidance Agreement (DTAA) between India and Thailand, was signed on 29 July 2015 and effective from 13 October 2015. It applies to various forms of income, including business profits, dividends, interest, royalties, capital gains, and employment income.
Key Provisions
- Withholding Tax Rates: The DTAA has substantially reduced withholding tax rates on dividends, interest, and royalties.
- Dividends: 10%
- Interest: 10%
- Royalties: 10%
Taxes Covered:
-
- India: Income tax and, formerly, wealth tax.
- Thailand: Income tax and petroleum income tax.
Capital Gains:
-
- Taxation depends on the type of asset (e.g., immovable property taxed in the country of location, gains from shares taxed based on the country of residence).
Employment Income:
-
- Income is generally taxable in the country where employment is exercised, with exceptions under the ‘183-day rule’ for short-term assignments.
Benefits
- Reduced Tax Burden: The DTAA has significantly reduced the tax burden on businesses and individuals engaged in cross-border activities.
- Enhanced Economic Cooperation: The agreement aims to facilitate mutual economic cooperation and stimulate the flow of investment between India and Thailand.
- Prevention of Double Taxation: The DTAA ensures that taxpayers are not subject to double taxation on the same income.
Business Note/Recommendations
Key Areas for Focus
- Deepen Economic Cooperation: India and Thailand should explore opportunities to deepen economic cooperation beyond bilateral trade. This could include:
- Comprehensive Economic Cooperation Agreement (CECA): Negotiating a CECA to reduce tariffs, liberalize trade in goods and services, and promote investment.
- Encouraging joint ventures between Indian and Thai companies to leverage their respective strengths and market knowledge, and facilitating the transfer of technology and expertise between the two countries to enhance competitiveness.
- Expand Investment: India and Thailand should create a more favorable environment for investment by:
- Improving Infrastructure: Investing in infrastructure projects to enhance connectivity and reduce logistics costs.
- Reducing Regulatory Barriers: Streamlining regulatory processes and reducing bureaucratic hurdles for investors.
- Promoting Industrial Parks: Developing joint industrial parks to attract investment and create jobs.
- Enhance Connectivity: Expanding connectivity between India and Thailand is crucial for boosting trade and investment. This could involve:
- Improving Air Connectivity: Increasing the frequency of direct flights between major cities in India and Thailand.
- Expanding Maritime Connectivity: Enhancing port infrastructure and promoting direct port-to-port connectivity.
- Exploring Rail Connectivity: Exploring the feasibility of rail connectivity between the two countries.
- Harness the Potential of the DTAA: Fully utilizing the provisions of the Double Taxation Avoidance Agreement (DTAA) to minimize tax burdens for businesses operating across borders.
Conclusion
The India-Thailand bilateral relationship offers significant potential for economic growth and cooperation. By focusing on these key areas, the two countries can further strengthen their economic ties, enhance trade and investment, and create new opportunities for businesses and individuals.
About Us
ASEAN Briefing is one of five regional publications under the Asia Briefing brand. It is supported by Dezan Shira & Associates, a pan-Asia, multi-disciplinary professional services firm that assists foreign investors throughout Asia, including through offices in Jakarta, Indonesia; Singapore; Hanoi, Ho Chi Minh City, and Da Nang in Vietnam; besides our practices in China, Hong Kong SAR, India, Italy, Germany, and USA. We also have partner firms in Malaysia, Bangladesh, the Philippines, Thailand, and Australia.
Please contact us at asean@dezshira.com or visit our website at www.dezshira.com and for a complimentary subscription to ASEAN Briefing’s content products, please click here.
- Previous Article Malaysia Public Holidays: Essential Dates for 2025
- Next Article Singapore’s Economic Outlook for the Next 5 Years