Thailand–India Trade Relations: Trends and Strategic Prospects

Global South Studies Series's avatarWritten by

Posted on Leave a comment

Aadityavikram Rana
Research Intern, Jindal Centre for the Global South,
O.P. Jindal Global University, India

Introduction

Thailand and India share a long history of civilizational, economic, and cultural linkages. In the modern era, these connections have evolved into strategic and commercial partnerships grounded in regional cooperation frameworks such as ASEAN, BIMSTEC, and the Mekong–Ganga Cooperation. Bilateral trade has been increasingly shaped by shifting global supply chains, economic diversification, and foreign policy strategies—specifically India’s Act East Policy and Thailand’s Look West Policy. This paper examines the evolution, composition, and institutional mechanisms of Thailand–India trade relations while evaluating recent policy frameworks, key challenges, and emerging opportunities. The objective is to assess how both countries can deepen their economic interdependence and enhance regional integration within the Indo-Pacific framework.

Economic Context and Trade Trends

Thailand is Southeast Asia’s second-largest economy after Indonesia, with a GDP of approximately USD 549 billion in 2023 (World Bank, 2024). It is a manufacturing and export-driven economy integrated into global value chains, particularly in electronics and automotive industries. India, now the world’s fifth-largest economy, has expanded its engagement with Southeast Asia through the Act East Policy to promote connectivity and economic integration (IMF, 2024).

Bilateral trade between Thailand and India reached USD 16.04 billion in 2023, with India exporting goods worth around USD 5.92 billion and importing approximately USD 10.11 billion (Ministry of Commerce & Industry, 2024). According to the Observatory of Economic Complexity (2024), India’s exports to Thailand have grown by 10.8 percent over the past five years, while Thailand’s exports to India have increased by 9.97 percent. Despite the pandemic’s impact, both economies have shown resilience, driven by mutual complementarities and increasing business-to-business collaboration.

Export–Import Composition

Trade between the two nations exhibits a balanced pattern of industrial and agricultural exchange. India’s key exports to Thailand include machinery, chemicals, gems and jewellery, agricultural commodities, and metals. Diamonds accounted for USD 1.35 billion in 2022, while combustion engines and aluminium contributed USD 1.11 billion and USD 252 million, respectively (OEC, 2024). Thailand’s exports to India include automobiles, electrical machinery, palm oil, and processed foods. Palm oil and chemical products alone accounted for more than USD 1.7 billion in 2022 (TradingEconomics, 2023).

These trade patterns reflect complementary economic structures: Thailand’s industrial strength in manufacturing meets India’s demand for intermediate goods, while India’s strong base in services, pharmaceuticals, and IT offers opportunities for Thailand to diversify imports (IBEF, 2025). The relationship also extends beyond goods to encompass tourism, logistics, and cultural exchange—sectors that further reinforce bilateral economic connectivity.

Institutional Frameworks

The institutional architecture supporting Thailand–India trade is multifaceted. Both countries are members of ASEAN and BIMSTEC and participate in the ASEAN–India Trade in Goods Agreement (AITIGA), signed in 2009 to promote tariff liberalization and economic cooperation (ASEAN Secretariat, 2023).

While AITIGA has facilitated greater market access, its implementation has faced delays due to differences in tariff structures, standards, and rules of origin. Several products—especially in agriculture and automotive sectors—remain excluded from tariff reductions, limiting the agreement’s full impact. Recognizing this, both sides initiated a review of AITIGA in 2023 to modernize provisions and address non-tariff measures (Department of Commerce, 2024). The review is expected to align the agreement with new trade realities such as e-commerce, digital trade, and sustainable development.

India’s withdrawal from the Regional Comprehensive Economic Partnership (RCEP) in 2019 reduced the scope of its engagement with East Asia. However, Thailand has advocated for re-engagement through a possible Comprehensive Economic Partnership Agreement (CEPA) or an upgraded AITIGA framework (Garg,). CEPA could help address tariff anomalies, encourage investment liberalization, and provide stronger protection for services and intellectual property.

From a policy perspective, Thailand’s Bio-Circular-Green (BCG) Economy Model aligns with India’s push for sustainable manufacturing and renewable energy cooperation. Policy synchronization in these areas could attract joint ventures in electric vehicles, solar energy, and agro-processing (World Bank, 2024).

Recent Developments

The 13th Joint Trade Committee (JTC) meeting held in New Delhi in 2024 marked a new phase in bilateral cooperation. The meeting emphasized the need for enhanced market access, addressing trade barriers, and exploring high-potential sectors such as pharmaceuticals, marine products, and electric vehicles (Department of Commerce, 2024). Furthermore, the two countries are developing an integrated payment settlement mechanism in local currencies to facilitate trade without relying on the U.S. dollar (Embassy of India, Bangkok, 2024). This initiative could significantly improve transaction efficiency and reduce currency volatility risks.

Beyond trade in goods, India and Thailand are collaborating on logistics and connectivity under the India–Myanmar–Thailand Trilateral Highway (IMT Highway), which aims to link Moreh (India) to Mae Sot (Thailand) via Myanmar. Once operational, it is expected to cut transport costs, reduce shipment times, and strengthen cross-border value chains (Keyes & Hafner, 2025). Additionally, both countries are leveraging BIMSTEC and Mekong–Ganga Cooperation frameworks to coordinate investments in infrastructure, digital connectivity, and energy.

Opportunities for Cooperation

Thailand and India stand at an inflection point where structural complementarities can translate into tangible economic gains. Opportunities span several strategic sectors. Thailand’s mature automotive base aligns well with India’s rapidly expanding electric vehicle market, creating scope for supply chain integration and technology transfer. India’s cost-effective pharmaceutical and healthcare capabilities could also meet Thailand’s rising post-pandemic demand for affordable medical products and services. In agriculture and food processing, joint initiatives in rice research, rubber, and processed foods offer pathways to strengthened food security and export competitiveness. Renewable energy cooperation is equally promising, with Thailand’s BCG model and India’s green-energy push enabling collaboration in biofuels, solar production, and sustainable technologies. Additionally, both countries’ movement toward interoperable digital payments points to fintech as an emerging driver of trade facilitation (UNCTAD, 2023). Beyond these economic sectors, tourism and creative industries—long-standing areas of cultural affinity—can serve as vital forms of “soft infrastructure” that reinforce economic diplomacy and deepen bilateral ties.

Challenges and Constraints

Despite growing engagement, several challenges persist. Trade imbalance remains a recurring issue, with India consistently running a deficit due to higher imports from Thailand. Non-tariff barriers (NTBs)—including divergent product standards, lengthy customs procedures, and complex certification requirements—often hinder market access (USTR).

Logistics infrastructure along the IMT corridor faces delays due to political instability in Myanmar and insufficient border facilities. Regulatory uncertainty in investment laws, taxation, and intellectual property protection further dissuades small and medium enterprises (SMEs) from entering bilateral trade. Moreover, competition from other ASEAN economies, such as Vietnam and Malaysia, intensifies the need for India and Thailand to offer more predictable and transparent policy environments.

Another critical challenge lies in policy coordination. While both countries articulate ambitious strategies—India’s Act East Policy and Thailand’s Look West Policy—their implementation often lacks coherence. Strengthening institutional linkages, establishing a joint monitoring mechanism, and promoting industry-led dialogues could bridge these policy gaps (IBEF, 2025).

Conclusion

Thailand–India trade relations exemplify a partnership built on economic complementarity, regional strategy, and shared aspirations for sustainable growth. The partnership has moved beyond traditional trade to encompass connectivity, digital payments, and green economy initiatives. The ongoing AITIGA review, proposed CEPA, and local currency settlement system mark significant policy milestones in deepening this cooperation.

Yet, to unlock the partnership’s full potential, both countries must tackle persistent trade imbalances, streamline regulatory frameworks, and operationalize connectivity projects such as the IMT Highway. Prioritizing CEPA negotiations, mutual standards recognition, and digital trade facilitation could further institutionalize cooperation. As Thailand seeks to diversify beyond China-centric trade and India aims to strengthen its ASEAN engagement, the bilateral economic relationship stands poised to become a central pillar of Indo-Pacific economic integration in the decade ahead.

References

The opinions expressed in this article are those of the author (s). They do not purport to reflect the opinions or views of the Jindal Centre for the Global South or its members.

Leave a comment