Embassy of India Manila

Bilateral Trade and Economic Relations

1. BILATERAL TRADE
   

India and the Philippines signed a Trade Agreement in 1979. Bilateral trade was slow between the two countries till the late nineties and then posted a positive growth after the deepening relations between India and ASEAN in the context of India's Look East Policy. The Agreement on Trade in Goods, which was signed on 13 August 2009 between India and ASEAN; and was fully implemented in 2011, helped in increase in bilateral trade. India and the Philippines have been steadily increasing their bilateral trade in recent years. As per the official trade figures of the Department of Commerce, GOI, bilateral trade between India and Philippines (in terms of value) has crossed the USD 3 billion mark for the first time in 2022-23 from USD 1.89 billion in 2015-16.  The bilateral trade between both countries in 2023-24 was USD 3.53 billion. As of March 2024, India’s exports to the Philippines stood at $350 million, while imports from the Philippines were $92.3 million. This resulted in a positive trade balance of $258 million in favour of India.

Existing full potential has not been realized and there is a need to further facilitate trade between the two countries especially since both economies are growing and are complementary to each other.

The major items of export from India to the Philippines include engineering goods; automobiles part and accessories, transmission apparatus, electric transformers, petroleum products, semi-finished products of iron and steel; drugs and pharmaceuticals, organic and inorganic chemicals; electronic goods; plastic and linoleum: rice; bovine meat, oil seeds; tobacco; groundnuts and others. Philippines accounts for around 20% of total Indian pharma exports to the ASEAN region. 

The major items of import from the Philippines include Electrical machinery; semiconductors; ores, slag and ashes; copper, lead; plastics; pearls and precious stones; residue and waste from the food industry; animal fodder and others.  

2.  BILATERAL INVESTMENTS

India and Philippines signed an Agreement on Avoidance of Double Taxation and Prevention of Fiscal Evasion in 1990, and an Agreement for Promotion and Protection of Investments (BIPPA) in 2000, which is now being revised. (Bilateral Investment Promotion and Protection Agreement (BIPPA) signed between the two countries on 28 January 2000 which had an initial tenure of 10 years and  came into force on 29 January 2001 expired on 28 January 2011 in accordance with Article 14 of the said Agreement. The Government of India has now proposed to terminate the Agreement and has proposed instead to enter into a new Bilateral Investment Treaty (BIT) based on the Model text for the Indian Bilateral Investment Treaty). 

Indian investment in the Philippines has over the years been mainly in the areas of IT& ITES [BPO]; pharmaceuticals and healthcare; yarn and textiles; infrastructure (airport); chemicals; automobiles; agriculture; biomass energy; FMCG and others. Estimated Indian investments in the Philippines is valued around US $ 5 billion. The earliest major Indian investment in the Philippines was the Aditya Birla Group in textiles & Chemicals (Indo Phil Group). A major entrant has been the GMR group Ltd, who in collaboration with a local company Megawide, won the bid in April 2014 for upgrading and operation of the Cebu-Mactan airport project for the next 25 years. The airport was inaugurated  and commenced operations in 2018. GMR-Megawide has also won the bid for Clark International airport expansion. Tata Motors and Mahindra have made their presence felt in the Automobile sector. Collaboration in the BPO sector has grown exponentially in the last ten years or so. Several Indian IT companies have already set up BPO operations in the Philippines and these include companies like WIPRO, TCS, L&T Infotech, Innodata, IL&FS Genpact, Infosys, HGS, Tech Mahindra etc. This close partnership in IT & BPO has become a win-win situation for both countries. Similarly Indian companies have a strong presence in Pharma (Generics) where Pharma majors like Dabur Pharma, Lupin, Torrent, ZydusCadilla, and Claris Life sciences have set up liaison offices to promote their products. Lupin has also acquired a stake in a local company. During the last few years, Indian companies have successfully executed some small and medium sized projects in the Philippines. Kalpataru and Kamani Engineering Corporation are presently engaged in executing transmission line projects in the Mindanao regions of the Philippines. Other engineering firms have been repairing and setting up sugar plants for Philippine companies. Wipro Enterprises Pvt. Ltd has acquired a Filipino line of personal care products called Splash Corp, valued at about US$ 200 million. In 2019, Larson & Toubro (L&T) India won the bidding conducted by the National Grid Corporation of the Philippines (NGCP) for the Marilao 230 KV EHV Sub-Station Power Transmission Project. Moreover, there were 3 notable Indian companies that invested in the Philippines. First, OYO, India’s largest chain of budget hotels, has expanded into the Philippines with an initial outlay of at least $ 50 million over the next few years. OYO’s investment programme may generate more than 1000 direct and indirect job opportunities for those in the hospitality industry. Currently, OYO is present in Metro Manila, Tagaytay City and  Cebu City and its plan is to spread out to more than 10 cities and locations in the Philippines by 2020, including Palawan, Boracay and Davao. Second, Indian automotive technology company CarDekho Group has acquired local automotive website Carmudi Philippines, Inc. With this acquisition, CarDekho’s technologies are expected to upgrade the buying and selling website experience for Carmudi Philippines in web marketing of second-hand cars in the Philippines which has grown at 14.4% compounded annual growth rate from 2014-2018. Third, Prasad Seeds Phils. Inc. has invested Php 175 million in Pangasinan, Philippines.

Potential sectors for business/investments in the Philippines:

• Agribusiness: Cacao, Coffee, mangoes, bananas, coconuts, rubber, bamboo, fruits and nuts, palm oil and other high value crops.

• Automobiles

• Infrastructure- Airports, Ports, Railways, Roads etc - through the PPP route

• IT-non voice sectors, particularly in medical, financial and legal services, game development, engineering design in manufacturing, software development

• Manufacturing: Electronics, Ship building, tools and dyes, furniture, garments, Power and Transport

• Pharma: Generics, medical equipment, vaccine, OTC, oncology and high end medicines, herbal medicines etc.

• Renewable Energy (RE) Sector

• Services and logistics.

• Tourism: Hotels, Services, management etc.

Philippine investments in India have been modest in the past and mainly comprised companies like V. Merida (processing of waste), Ayala (Renewable energy, construction & ITES); SPI Technologies (ITES); Del Monte & Liwayway (Food processing); Atlantic Gulf & Pacific Company (AG&P); Lloyd Laboratories, IPI (Pharma). The biggest investment for the Philippines to India is the LNG plant being set up in Kokinada (AP) by AG&P, Philippines. AG&P plans to invest up to US $ 1.4 billion in LNG plants in the East Coast of India as well as in the 12 city gas grids in India that they have won in open bidding in 2019.

(c) BILATERAL MECHANISMS 

Various Joint Working Groups [JWG] have been set up and their meetings, particularly the JWG on Agriculture, on FinTech, on Health & Medicine, on Tourism, & on Trade and Investment are expected to identify new growth and partnership areas between government and industry in both countries and contribute towards enhanced two-way growth in trade and investment. 

Agriculture: Agriculture is one of the focused sectors identified by the leaders of both the countries. Revised MoU on Cooperation in Agriculture and Related Fields between India-Philippines was signed on 13 November 2017. The 2nd meeting of the India-Philippines Joint Working Group (JWG) on Agriculture was held on 18 May 2018 at Manila.  The 3rd JWG Meeting on Agriculture is proposed to be held in New Delhi. Shri Narendra Singh Tomar, Minister of Agriculture & Farmers Welfare met Mr. William Dar, Secretary, Department of Agriculture, Philippines in New Delhi on 21 April 2022 during which discussions on agriculture and the blue economy were held. On request from the Philippines side, a training session was organised on Pradhan Mantri Fasal Bima Yojana (PMFBY) for the officials of Department of Agriculture; Department of Finance and Philippine Crop Insurance Commission (PCIC) in May 2022. In October 2023, the first batch of ultra-low Glycemic Index (GI) rice samples developed by International Rice Research Institute’s Regional Research Center in Varanasi was presented to President Marcos during 6th International Rice Congress  in Manila.

Financial Sector Engagement and Development Cooperation: The MoU for constitution of JWG on Cooperation in Financial Technology was signed on 19 June, 2023. This would facilitate partnership between India and the Philippines in the fields of digital payments, financial inclusion, fintech and related areas. The 1st JWG meeting on FinTech was held on 12 September, 2024 in New Delhi. Further, to enhance Development Cooperation, both countries signed an Agreement on Quick Impact Projects (QIP) on 7 February 2023, which would open for the first time a regular grant funding window for the Philippines. Both sides have mutually agreed on 6 QIPs for the year 2024 in the sectors of Agri, Health & Capacity Building. The Memoranda of Agreements (MOAs) regarding the Indian Grant Assistance for implementation of the 6 QIPs were signed on 15 July 2024.  

Health and Medicine: Health and Medicine is another focused sector identified by the leaders for bilateral engagement. The Philippines recognises India as a global leader in terms of pharmaceuticals and medical supplies. Philippines was the first ASEAN Member State to grant Emergency Use Authorization (EUA) for Bharat Biotech’s Covaxin. Presently, Philippines accounts for nearly 20% of total Indian pharma exports to the ASEAN region and India continues to be the largest supplier of pharma products to the Philippines. An MoU on cooperation in Traditional Medicine between Philippines Institute of Traditional Medicine and Alternative Health Care (PITAHC) and National Institute of Ayurveda, Jaipur was signed on 19 April 2022. An AYUSH delegation from National Institute of Ayurveda (NIA), Jaipur visited Manila on 13-15 June, 2023. The delegation held extensive discussions with PITAHC. The 2nd  JWG on Health and Medicine was held on 10-11 February 2016 in New Delhi, under the overall framework of India-Philippines MoU in the field of Health and Medicine signed in New Delhi on 5 October 2007. The 3rd JWG Meeting on Health was held on 19-20 April 2018 in Manila. The 4th JWG Meeting is proposed to be held in New Delhi. During the  5th India-Philippines Joint Commission meeting in June 2023, both sides agreed to work together to further strengthen health sector cooperation and hold an early meeting of the bilateral JWG on Health to devise concrete initiatives. In February 2024, an Indian delegation led by the National Health Authority (NHA) visited the Philippines as part of a Triangular Development Partnership (TriDeP) program to engage in the health sector. The focus areas were telemedicine and psychosocial facilities. 

Science & Technology: High-level visits and meetings between Indian and Philippines leaders have consistently highlighted science and technology as a key pillar of the growing bilateral partnership. Bilateral Programme of Cooperation (POC) in Science and Technology, for the period 2019-2022 was signed in October 2019 outlining five broad areas of cooperation, namely agricultural biotechnology; health, pharmaceutical & medical sciences; Information and Communication Technology (ICT); Material Science & Technology; and Ocean & Atmospheric Science. In its first Joint Committee Meeting (JCM) in July 2021, implementing guidelines on the call for Joint Research Projects (JRP) were finalized and signed. Virology; Applications of Artificial Intelligence in diverse areas such as agriculture, health and smart cities; Block chain technologies on Government services/processes; and Additive manufacturing of new materials (metal and ceramics) were identified as key research areas. Subsequently, 3 JRP proposals have been identified for implementation covering areas of (i) Virology (ii) Artificial Intelligence and (iii) Additive manufacturing of new materials. Looking at the successful implementation of POC, both sides have agreed to enhance the scope of cooperation areas under the renewed POC for next three years i.e. 2024-2027. On 5 March 2024, the Embassy hosted the First India-Philippines Tech Summit (IPTS) in partnership with Ministry of Electronics & Information Technology (MeitY) and Department of Industry & Internal Trade (DPIIT) from the Indian side and Department of Information & Communication Technology (DICT) and Philippines Chamber of Commerce & Industry (PCCI) from the Philippines side. The event showcased innovative digital products and solutions from India' s vibrant digital ecosystem focusing on 3 key sectors: Agriculture, Finance and Health.Overall, India and the Philippines have been steadily expanding their cooperation in science and technology.

Space Cooperation:India and the Philippines have been expanding cooperation in a new area of engagement in the space sector. In September 2022, 3 senior scientists from the Philippine Space Agency (PhilSA) participated in the 7th edition of the Bengaluru Space Expo, which was jointly organized by the Confederation of Indian Industry (CII), the Indian Space Research Organisation (ISRO), the Indian National Space Promotion and Authorisation Centre (IN-SPACe), and New Space India Limited (NSIL). In October 2022, 2 candidates from PhilSA attended ISRO's UNNATI Training program for nanosatellite building. Participants from the Philippines also attended long-term courses like the 13th Satellite Meteorology and Global Climate course (SATMET) and short courses on "Small Satellite Mission" organized by the Centre for Space Science and Technology Education in Asia and the Pacific (CSSTEAP). On June 8, 2023, the Department of Space/ISRO had a preliminary interaction with PhilSA to identify areas of mutual interest for space cooperation. The dialogue aimed to enhance collaboration in space-related areas. It was agreed to start with capacity building courses based on the specific requirements of the Philippines.  In January 2024, the Philippines responded positively to India' s proposal on space cooperation. Overall, India and the Philippines are actively exploring opportunities to deepen their space cooperation, focusing on areas like capacity building, satellite technology, and joint research and development.

Tourism:A bilateral MoU on Tourism Cooperation was signed on 18 October 2019. The 1st meeting of India-Philippines JWG on Tourism was held on 8 October, 2020 which covered various issues to enhance two-way tourist flow. Discussions were held on expanding tourism flows, including direct air connectivity, links between travel bodies, ease of visa access for Indian nationals and synergies in promotional events. The 2ndJWG meeting on Tourism was held  on 21 May 2024 in Manila. The Indian delegation was led by Ms. Anita Baghel, Additional Director General, Ministry of Tourism and the Philippine side was led by Ms. Verna C. Buensuceso, OIC Undersecretary, Department of Tourism.  The meeting covered several tourism-related issues of mutual interest such as tourist visas, air & sea connectivity, exchange of best practices and information, leveraging digital technology, investments in the hospitality sector, capacity building and research & development, & sustainable tourism. The new Air Services Agreement, which was signed on 27 September 2021 (ratified in June 2023), is expected to facilitate direct air connectivity between India and Philippines. Sh. Arvind Singh, Secretary, Ministry of Tourism met Ms Bernadette Romulo-Puyat, Secretary, Department of Tourism, Philippines in April 2022 on the sidelines of World Travel and Tourism Council (WTTC)’ s Global Summit held from 20-22 April, 2022 in Manila. On 26 Jan, 2023 President Marcos announced that the Philippines would extend e-Visa for travelers from India, Korea, China and Taiwan. The e-Visa for Indians and direct air connectivity between India & Philippines is expected to greatly expand tourism, business and people to people ties. On 4 February 2023 Tourism Secretary Christina Frasco attended 10th meeting of ASEAN-India Tourism Ministers wherein she complimented India for allowing 100% foreign direct investment in tourism sector, signing of air service agreement and agreement on tourism between India and Philippines in terms of encouraging better development in connectivity, hospitality and sustainability. 

Trade & Investment: The India-Philippine Joint Working Group (JWG) on Trade and Investment has been meeting fairly regularly under the joint Chairmanship of our Commerce Secretary and Philippines Undersecretary for Trade and Industry to discuss ways to further boost trade.  The 12th Joint Working Group on Trade and Investments was held in New Delhi on 31 March 2016. The 13thJWG was held virtually on 17 September 2020.Both sides discussed areas of cooperation including bilateral cooperation initiatives and issues involving trade, investments, and improved market access for both countries. The 14thJWG meeting on Trade and Investment is proposed to be held in Manila. During the 5th India-Philippines Joint Commission on Bilateral Cooperation (JCBC) in New Delhi in June 2023, the Philippines and India agreed to commence negotiations on a bilateral Preferential Trade Agreement (PTA) to reduce and eliminate tariffs on various goods. 

The India-Philippine Joint Business Council (JBC) was set up in 1994 and it has met seven times starting in 1995.  The nodal agencies are the Philippine-India Business Council under PCCI on the Philippine side and the Federation of Indian Chambers of Commerce and Industry (FICCI) on the Indian side.  FICCI led a delegation of 12 businessmen to Manila from March 3-6, 2014 and again in November 2017 for the ASEAN Business and Investment Summit. The delegation met the Secretary of Trade & Industry, various local chambers of commerce and businessmen during their visit.

Trade delegations have been encouraged to the Philippines to facilitate direct interaction with Filipino businessmen. The Federation of Indian Export Organisations (FIEO) had a trade delegation that visited three major cities in the Philippines on 15-17 November 2022. These included conducting Buyers-Sellers Meeting (BSM) at Manila (Luzon); Cebu (Visayas) and Davao (Mindanao) in partnership with regional business chambers. Further, The Embassy of India, Manila in coordination with Indian Electrical and Electronics Manufacturers Association (IEEMA), the apex Indian industries body in the specialized sector of electricals, industrial electronics and allied equipment and the Philippine Overseas Construction Board (POCB), an attached agency of the Philippine Department of Trade and Industry organized a Business to Business (B2B) networking event in Manila, on 11th July, 2023.  An IEEMA delegation from India comprising 25 representatives from 22 leading Indian companies in the field of electricals, industrial electronics and related services visited the Philippines.  Nearly 70 Filipino entrepreneurs who are engaged in the electrical and industrial electronics sector also participated in the event for potential collaborations with their Indian counterparts. On 11 March 2024, the India-Philippines Chemical Business Meet was organised by the Basic Chemicals, Cosmetics and Dyes Export Promotion Council (CHEMEXCIL) in partnership with the Embassy in Manila. 16 Indian firms and more than 50 Filipino firms joined the event. 

As part of its commercial outreach activities, the Embassy of India in Manila organizes business roadshows in different parts of the Philippines in partnership with the regional business chambers, city administration, and provincial government to explore opportunities for trade and investments as well as to generate awareness and apprise local Government, authorities, businesses and other stakeholders in the Philippines about the successes of the Indian businesses. The 1st edition of the India Business Roadshow in the Philippines was organized in a hybrid format in Baguio City on 28 November 2021 in partnership with the Philippine Economic Zone Authority (PEZA) under the Global Biz forum, with active participation from more than 10 Indian businesses. The 2nd India Business Roadshow was held in Davao City on 18 February 2022, with 10 participants from the Indian side and around 100 participants from the Philippines side. The 3rd India Business Roadshow was held in Cagayan de Oro City on 18 May 2022, with 39 participants from the Indian side and 71 participants from the Philippines side. The 4th India Business Roadshow in Ilocos Norte was held on 27 March 2023, with 16 participants from the Indian side and 139 participants from the Philippines side. The 5th India Business Roadshow was held in Iloilo on 31 May 2023, with 40 participants from the Indian side and 161 participants from the Philippines side. The 6th India Business Roadshow was held in Cebu on 14-15 November 2023 with more than 20 Indian businesses from the Agriculture, Energy & Infrastructure, Healthcare & Pharmaceuticals, IT- BPO/BPM & Innovative Tech Solutions, and Tourism sectors that participated and showcased their products and solutions.

Other areas: The Agreement on Cooperation and Mutual Assistance in Custom Matters, signed on 24 April 2022 and ratified in June 2023, aims to facilitate trade between the two countries. It enhances customs-related cooperation, streamlining processes and promoting efficient cross-border movement of goods. India and the Philippines are exploring a Memorandum of Understanding (MoU) on Cooperation in the Field of Digital Technologies. This new MoU will subsume existing agreements related to Information and Communication Technology (ICT) and Cyber Security. Cooperation in digital technologies can lead to knowledge exchange, innovation, and economic growth. Bilateral discussions are also underway regarding cooperation in renewable energy. Both countries recognize the importance of sustainable energy sources and may explore joint projects or knowledge-sharing initiatives.

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Updated as of 25 October 2024