India Philippines Trade – Problems & Prospects
By Ratan Lal Basu
Copyright 2017 Ratan Lal Basu
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Trade and cultural relations between India and the islands of Philippines may be traced back to the pre-historic times. It is presumed that Indian influence entered Philippine islands from the Indianized kingdoms of Srivijaya and Majapahit in Indonesian islands. Many scholars opine that the name of the Visaya Island has its origin in ‘Srivijaya’. During 10th to 14th century Indian influences penetrated Philippines from the Indian colonies in Indonesia and through direct migration from the Indian subcontinent to the Philippines. The discovery of artifacts of Indian orientation in various islands of Philippines testifies to this view. The Maranao folk narrative ‘Maharadia Lawana’ has close resemblance to the great Indian epic Ramayana.
Even today innumerable words of Sanskrit origin are extant in Cebuano and other Visayan languages. They are also found in Tagalog. It is held by historians that influence of Sanskrit words and literature spread to Philippine islands during 10th to 12th centuries A.D. Some examples of Sanskrit influence of Tagalog and Cebuano are given in the following tables.
Sanskrit Influence on Filipino Languages
Innumerable words of Sanskrit origin are found in languages like Words Kapampangan, Tausug, Ibanag etc.
Various Datus or Indianized kingdoms were established in various islands of Philippines during 10th to 14th century A.D. The rulers of these kingdoms were called ‘Rajas’, the Sanskrit word for ‘Kings’. The most import among the Indian rajas ruling Philippine islands was Rajah Sri Bata Shaja whose kingdom was in the Butuan Island. The kingdom of Cebu was ruled by the Lakandula dynasty of which the most prominent king was Rajamuda Sri Lumay. The kingdoms Ma-I and Madja-as were also ruled by Rajas. Sulu had an Indian kingdom whose first ruler was Rajah Sipad the Older.
Since the late 14th century Islamic penetration gradually ended the rules by the Indianized rajas in Islands of Jolo, Sulu, Davao and others in Visayan and Mindanao regions. The first Islamic onslaught was on the Sulu kingdom when Sayid Abubakar, a scholarly prince and religious preacher arrived at Sulu, married Paramisuli, the daughter of Raja Baguinda and established the first Islamic Sultanate in Philippines after inheriting the kingdom of his father-in-law. But the cultural and other Indian influences persisted for centuries, even during the Spanish rule. Many earlier Muslim rulers used to use the title ‘Raja’ before their names.
Later on in course of the Anglo-Spanish wars, 600 Sepoys (Indian native soldiers in British army) arrived in Philippines as a part of the British military expedition and many of them mutinied and refused to return back when the British army withdrew. These Sepoys settled and got assimilated with local people in Rizal and Cainta regions. Their descendants are still found in various parts of Philippines. During the Spanish regime there are evidence of robust trade relation between India and Philippines, especially between Manila and ports in the Eastern coast of India extending from Bengal to Madras. In this trade Philippine exports consisted mainly of tobacco, silk, cotton, indigo, sugar cane and coffee.
India had established diplomatic relation with independent Philippines in 1949 and a friendship treaty was signed in 1952 but the relation was stunted till mid 1970s because of differences in foreign policy during the Cold War regime. However with the initiative of an Indian industrialist during 1975-76 economic and cultural relation between the two countries revived and there has been further development in the relation in course the last few decades. In recent years the two countries have taken joint initiative to step up bilateral foreign trade. This e-Book examines the problems and prospects of foreign trade between the two countries. The rest of the paper takes up the following pertinent issues relating to the Indo-Philippine foreign trade.
During the early 1970s, the Vast Birla Industrial House was fragmented because of family division of the business empire among the third generation of the Founder, G.D. Birla. In an endeavor to revive his business, Aditya Vikram Birla, one of the grandsons of the founder attempted to explore possibility of setting up textile firms in East Asia. To this end he started negotiations with President Marcos. Notwithstanding political uncertainties in the island countries Aditya was capable of convincing Marcos to permit establishment of a joint textile venture in Philippines. As result the textile company Indo-Phil Textile Mills Inc., a joint India-Philippines venture came into being in 1975. At the initial stage the mill began with only 15,500 spindles and small workforce of 300 employees. In course of time the industrial unit achieved spectacular success and the mill grew in size and capacity with more spindles rapidly. In 1988, the company founded a parallel unit with most up-to-date technology. With change of tastes demand for garment made of synthetic fiber increased rapidly and to size the opportunity, the Indo-Phil lndo-Phil Acrylic Manufacturing Corporation was founded in January 1990 with 3,856 worsted spindles and the most sophisticated technology available at that time. In 1993, the Indo-Phil Cotton Mills was established to cope up with the growing indigenous demand for polyester cotton blended yarns. The capacity of this mill was almost trebled in 1995. To ensure uninterrupted power supply to the [producing units, a 12.4 MW Indo-Phil Power Plant was founded in September 1994 and the capacity of this plant has been stepped up to stands expanded to 24.8 MW in course of time.
The company has grown rapidly in terms of production of both yarns and fabrics and now it’s the largest textile manufacturing company in Philippines with high quality products, advanced technology and meeting both internal and export demand of the country to a significant extent. About 25% of the products of Indo-Phil are directly exported to USA, Europe, Korea, Taiwan, Malaysia, Australia, etc.
The most important significance of Indo-Phil is that it opened up the path of India-Philippines economic relation which had been stagnated during the cold war regime. Following the trail of founding of Indo-Phil trade agreements between the two countries were signed and other endeavors were jointly initiated by the two countries.
After normalization of relations between the two countries through the Indo-Phil, a Trade Agreement was signed on 29 May 1979 with a view to strengthening this revived relation Mrs. Indira Gandhi, the then Prime Minister made a stop-over visit to Manila in 1981 on her way back from Australia. Later on President R. Venkatraman of India paid a state visit to Philippines in 1991.
Summit-level meetings increased during the 1990s. President Ramos visited India in March 1997 followed by the visit of President Arroyo in October 2007.
After the first Philippines Trade Mission to India in 1995, a Joint Working Group and a Joint Business Council were set up to explore the potentials for trade and new areas of joint ventures. Regular bilateral meetings have been held at regular intervals since then.
President Fidel V. Ramos of Philippines visited India in 1997 and as a follow up the Philippines – India Business Council (PIBC) was first organized in the same year intending to explore cooperation to promote Information Technology and Pharmaceuticals sectors.
Policy consultation talks between the two countries were initiated in 2000 and since the important officials of the foreign ministries of the two countries meet annually to discuss regional and international issues of common concern.
PIBC was convened on May 8, 2002 under Philippine Chamber of Commerce and Industry (PCCI), with the objective of revitalizing business ties and amicable relations with the Indian business community.
The PIBC have the following sectors under its fold: information technology, pharmaceuticals, water technology, leather goods/footwear, energy, gas and oil, power generators, yarn manufacturing, garments, jewelry, computer software & hardware, food and food ingredients, among others. The Embassy of India, Filipino Indian Chamber of Commerce, DTI-BETP and DFA serve as cooperating agencies in the affairs of the Council.
A forum on “Doing Business with India” was conducted by joint collaboration of PIBC, PCCI and Federation of Indian Chambers of Commerce and Industry (FICCI) in January, 2003 at Hotel Intercontinental Manila with Ambassador Navrekha Sharma of the Embassy of India and Ms. Carol Carreon of Bayan Trade as Guest Speakers.
During November 9-16, 2003, a delegation consisting of prominent Filipino businessmen from PIBC traveled the three major cities of Mumbai, Hyderabad and New Delhi in India and visited the stock exchanges and some of the top Indian private and public institutions. Their visit was appreciably successful.
President Abdul Kalam of India visited Philippines in February 2006 and the Indian Prime Minister Dr. Manmohan Singh paid a visit to Philippines in January visited Philippines in January 2007 to attend the ASEAN and East Asia Summits. He met President Arroyo of Philippines during this visit. Moreover there have been continuous interactions at the level of Foreign Ministers and other ministers and senior officials of the two countries.
In course of the State Visit to India of President Gloria Macapagal Arroyo on 5 October 2007 an agreement to establish a Joint Commission on Bilateral Co-operation was signed with a view to further strengthening and developing co-operation in the field of trade, economic, scientific, technological and other fields. The meeting of the Joint Commission is held once every two years, co-chaired by the Ministers for Foreign Affairs of the two countries.
The month of November 2009 was proclaimed as Philippines–India Friendship Month by then President Gloria Macapagal Arroyo in commemoration of the 60th anniversary of Philippines–India diplomatic relations. In this connection a special function was held in Manila by the FICCI (Federation of Indian Chamber of Commerce and Industries). President Arroyo had graced the occasion and delivered a lecture.
The inaugural session of the Joint Commission was held on 15 March 2011 and both the sides endorsed on co-operative initiatives in various fields like trade, agriculture, defence etc.
In June 2012 an exhibition was organized in Manila by the Synthetic and Rayon Textiles Export Promotion Council of Philippines and rayon textile producers and exporters from India in Manila.
The following table depicts the growth of trade between India and Philippines since 2003.
Rate of Growth of India’s Trade with Philippines (%)
(Source: DGCIS & Directorate General of Foreign Trade, India)
The above table reveals an impressive growth of foreign trade between India and Philippines in recent years. However in terms of value (Exports from India = 992.91, Imports to India = 455.63 and overall trade 1448.54 US dollars during 2011-12) the volume of trade is an insignificant percent of global trade of both the countries. So the two countries are to go a long way to achieve a commendable bilateral trade. The present low volume however indicates a bright prospect of exploring new areas of trade between the two countries.
The prospect of future trade between the two countries is very bright. The prospect of major areas in which there is vast possibility of enhancing foreign trade between India and Philippines are:
Major Potential Areas of Foreign Trade
Pharmaceuticals; Steel; Textiles; Motorcycles and Auto-Parts; Mining and Infrastructure; Dairy and other Agro-Based Industry; Bio-and Thermal Energy; Space and Defence- Related Industries; Construction; Environmental Energy; Coal; Information Technology.
Major Indian Companies operating in Philippines
Aditya Birla Group: Hinduja Global Solutions Limited: Ranbaxy; Glenmark Pharmaceuticals Ltd.; Jaguar Overseas ltd.; L&T Infotech; Biostadt India: Lupin Ltd: State Bank of India: The New India Assurance Co. Ltd.; Wipro BPO Phils. Ltd.; Infosys BPO Ltd. ;Zydus Cadila; Claris Lifesciences Ltd.; Aptech Ltd.; Indo Phil Textile Mills.
Bilateral Agreements between India & Philippines
Agreement on Economic and Technological Cooperation
Agreement for Cooperation on the Utilization of Atomic Energy for Peaceful Purposes
Memorandum of Understanding (MOU) concerning Air Services
Agreement on Cooperation in the Field of Tourism
Agreement on Cooperation in Agriculture and Related Fields
Agreement Concerning Defense Cooperation
RP-India Joint Declaration for Cooperation to Combat International Terrorism
Agreement on the Establishment of a Joint Commission on Bilateral Cooperation
Memorandum of Agreement on the Exemption of Visa Requirements for Holders of Diplomatic and Official Passport
Memorandum of Agreement on Enhanced Cooperation in the Field of Renewable Energy
Memorandum of Understanding on Cooperation in the Field of Health and Medicine
Memorandum of Understanding Regarding the Utilization of a US$15 Million Credit Line between the Government of the Republic of the Philippines and the Export-Import Bank of India
Memorandum of Agreement between the Philippine International Trading Corporation and the State Trading Corporation of India Limited for Trade between the Philippines and India.
Source: Embassy of the Philippines, New Delhi, India.
Although commercial, cultural and political relations between India and Philippines have stepped up considerably in recent decades, the two countries are to go a long way to facilitate unhindered flow of foreign trade. The following problems may hinder rapid growth of foreign trade between the two countries:
1. Cumbersome Visa Procedures
2. Red Tapism as regards clearance to exporters and importers
3. Isolated islands in Philippines with local linguistic and other peculiarities
4. Mutual Unfamiliarity of the People and Businessmen of the Two Countries: a common joke among the Pinays (Philippine females) is HINDI is the national language of India and in Tagalog it mea ns ‘NO’
5. Growing hostility between the migrant Indian community and local Filipinos, in the form of proposals such as granting dual citizenship to migrant Indians in the Philippines
6. Chinese Competition in trade with other countries. Imports may be associated with production of goods to be exported to other countries and growth of trade in these fields may depend on prospect of such third country trade
The author of this e-Book Dr. Ratan Lal Basu is a prolific writer of books and articles in economics. His articles, published in various journals, cover all conceivable branches of economics. He is one of the few scholars who have done their doctorate degree on the Arthasastra of Kautilya, a treatise on Economics, Statecraft and Espionage Mechanism written in India around 300 B. C. Dr. Basu is an authority on the economic ideas embedded in the Ancient Indian Sanskrit texts and his well-known Book ‘Ancient Indian Economic Thought: Relevance for Today’ has obtained wide acclaim all over the world. Dr. Basu may be contacted at: [email protected]
Trade relations between various Filipino islands and Indian subcontinent may be traced back to the pre-historic times. Findings of Iron Age in Philippines give testimony to the existence of trade between Tamil Nadu and the Philippine Islands during the ninth and tenth centuries B.C. During 10th to 14th century A.D. trade relations between India and Philippines flourished and there were Indian influences on culture and languages of Philippines. During the 18th century, there was robust trade between Manila and the Coromandel Coast of India, involving Philippine exports of tobacco, silk, cotton, indigo, sugar cane and coffee. Since the Spanish period India-Philippines trade declined. After independence the two countries established diplomatic relation, and a friendship treaty was signed on 11 July 1952. But because of differences in foreign policy economic relation between the two countries was restored only during 1970s after Aditya Birla, an Indian industrialist took initiative in establishing Indo-Phil, a joint India-Philippines venture in textiles. There after various steps were taken to restore trade relation between the two countries. Some of the steps are: A trade agreement signed between the Philippines and India was signed on 29 May 1979. In 1995, a Joint Working Group and a Joint Business Council were set up to assess and identify potentials for trade as well as identify new areas for collaboration. The Philippines – India Business Council (PIBC) was organized in 1997. The Policy Consultation Talks between the two countries were established in 2000. On May 8, 2002 under the umbrella organization of Philippine Chamber of Commerce and Industry (PCCI), PIBC was convened with the objective of restoring and enhancing business ties and friendly relations with the Indian business community From November 9-16, 2003, a delegation from PIBC traveled the three major cities of Mumbai, Hyderabad and New Delhi in India. The Joint Commission on Bilateral Co-operation, to further strengthen and develop the co-operation in the field of trade, economic, scientific, technological and other fields of co-operation was signed during the State Visit to India of President Gloria Macapagal Arroyo on 5 October 2007. The inaugural session of the Joint Commission was held on 15 March 2011. An exhibition was organized by the Synthetic and Rayon Textiles Export Promotion Council of Philippines and rayon textile producers and exporters from India in June 2012 in Manila. Trade between the two countries was increased by 10.8% during 2011-12. It is expected that with further efforts on the part of the two countries trade between the two countries would rise rapidly benefiting both the economies.