Commerce, culture and connectivity are often cited as the three main pillars of India-Thailand relations. Maritime trade between the two countries has existed since 1500 BCE, paving the way for people-to-people contact and cultural interaction between the two states bordering the Bay of Bengal.
Thailand was among the first nations to establish diplomatic ties with India post-independence. Fast-forward to the present day, and the two countries have entered multiple commercial and strategic partnerships and are members of various regional forums.
As the world completes almost three years of Covid-19, the virus continues to haunt airports, hospitals, markets, the global economy, and people’s minds. The heavy dependence on the Chinese economy needed to be reduced.
The inextricable linkages of global value chains (GVCs) have undoubtedly put many countries under pressure and disrupted the demand-supply equilibria across product and factor markets due to the locking up of the market forces and supply-chain disruptions emanating from China.
This has provided countries with the impetus to expand domestic capacities and attract investments that are finding alternative manufacturing bases where India and Thailand have a significant role to play.
Additionally, the pandemic provided a strong impetus for governments to shift from leveraging inter-country comparative advantages to intra-regional and domestic sufficiency in value chains. Most important, countries have become more cautious regarding their involvement in economic groupings and multilateral platforms, adding new dimensions to globalisation trends in the post-pandemic world.
Support for multilateralism
India and Thailand have often found synergies in these multilateral forums, such as the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) or ASEAN-plus-six that are expected to gain vigor in the post-pandemic world.
In the context of India-Thailand ties, there are four crucial domains that could show the way forward for holistic progress in the region.
First, the much-spoken-about fact is connectivity. Three states have come together to commission the India-Myanmar-Thailand Trilateral (IMTT) Highway to enhance land-based connectivity and allow the movement of goods from landlocked parts of the respective economies to the wider Southeast Asia markets.
The IMTT was built to have a free, open, and inclusive Indo-Pacific region. It is expected to create another axis of economic activity in Asia, paralleling China’s Belt and Road Initiative (BRI), which has substantially dampened in the post-pandemic scenario.
Initial plans are to extend the IMTT to Cambodia, Laos and Vietnam to improve land connectivity in Southeast Asia. For Northeast India, which is resource-rich with low levels of economic growth, border trade with neighboring countries could help usher in prosperity.
Second, regarding trade, despite the Covid-19 pandemic, 2021-22 saw bilateral trade between India and Thailand reach an all-time high of US$15 billion. The Indian labor market is lucrative for Thai businesses as the Thai population is aging rapidly, threatening plans for economic expansion.
Moreover, India has a young and cheap labor market in which Thai companies could potentially import heavy manufacturing activities to India. The short distance, good land and sea-based connectivity, favorable trade laws and the availability of inexpensive labor across the Indian states would be favorable factors in this regard.
Third, as the global community has crossed the halfway mark for the UN Sustainable Development Goals (SDGs) Agenda 2030, India and Thailand must find complementarities in policies to advance sustainability objectives.
Sustainable development
India’s Act East policy complements Thailand’s Act West policy. The end of the Cold War saw Western Europe and North America emerge as the world’s power centers, deepening the need for Third World unity in tackling global challenges such as the attainment of Millennium Development Goals (MDGs) and fighting climate change.
This is extremely important, as the Asia-Pacific nations must catch up to the SDG targets – according to the UNESCAP, the region is not on track to achieve any of the 17 SDGs and is estimated to lag behind the original Agenda 2030 by approximately 35 years.
Given the impact of the pandemic, a large part of development finance has deviated toward health emergencies, social security, and the protection of vulnerable sections of the population. Thailand is committed to creating a low-carbon society, India has also pledged to decarbonize, and the two countries could collaborate on research and development to develop greener transition technologies.
Finally, in the post-pandemic world, both states have made progress with disruptive technology practices and should invest in this trajectory further to reduce inequalities and bring convergence between the rich and poor.
For example, in 2016, the Thai government launched Thailand 4.0, an economic model to maneuver the country from a middle-income trap and an income-inequality trap. The plan aims to elevate Thailand to a first-world country.
The tenets of this plan have parallels with Indian efforts to bolster the economy. Both states want to invest in innovation and technological advancements, while Thailand wants to incubate entrepreneurs. India has also implemented programs such as “Startup India,” “Atmanirbhar Bharat” and “Make in India” to boost entrepreneurship in the domestic economy.
On the one hand, the Thai government is promoting the Bio-Circular-Green Economic (BCG) Model for inclusive and sustainable growth. The BCG model is focused on promoting four industries: agriculture, medical and wellness, bioenergy, and tourism. It employs technology to ensure efficient use of resources, maintain and restore domestic resources and reduce wastage.
The four identified sectors are essential players in the Indian economy, and India stands to gain from collaborating with Thailand to ensure its sustainability commitments.
On the other hand, to vaccinate a population of 1.4 billion, India launched the CoWIN App, a digital platform facilitating registration, immunization, appointments and issuing digital vaccine certificates.
The United Nations Development Program (UNDP) celebrated CoWIN as a powerful example of how technology can be used to upscale public health programs; the citizen-centric design and the simple interface have allowed the government to vaccinate the population at a rapid pace.
An economic flux is under way in the South Asian economy; the economies of Pakistan, Myanmar and Sri Lanka are faltering, and there is a threat of recession and increasing debt.
Additionally, the Ukraine-Russia war has meant an increase in the import bill for states around the globe. Increased fuel and food prices in South Asia have created supply bottlenecks and caused extreme inflation.
Hence partnerships between India and Thailand will be crucial for greater regional economic resilience and can help combat such unforeseen global financial misfortunes.