Bilateral trade has a beneficial effect on a nation's economic growth, fostering stronger bilateral relationships and facilitating direct interactions between people. It also serves to attract global investors and encourage foreign direct investment, ultimately leading to an improvement in the standard of living by creating more employment opportunities and boosting income levels, thereby enhancing economic well-being and growth.
In addition, bilateral trade facilitates the transfer of technology between nations, enabling companies to gain a competitive edge and increase productivity by lowering production costs, thereby enhancing their ability to compete in the international marketplace. The increased geopolitical uncertainty and ongoing conflicts have significantly complicated and interconnected global trade, resulting in a substantial realignment of trade among nations that has not been witnessed in many years.
The recent escalation in tensions between the United States, Israel, and Iran has resulted in significant disruptions to global energy supply chains, particularly affecting Asian economies. This has led to notable trade reforms within Asian countries, indicating a shift in global trade dynamics.
India, Indonesia to Revive Trade Working Group Meet After 5 Years
In accordance with its strategy to diversify trade, India is preparing to convene the second meeting of the India-Indonesia Working Group on Trade and Investment (WGTI), following a period of approximately five years during which bilateral trade experienced a decline over the past two fiscal years.
Indonesia is considered India's second largest trading partner within the ASEAN region, following Singapore, and holds significance as a wide array of goods are exported to this country. Both nations are eager to enhance trade and investment relations by addressing both tariff and non-tariff impediments amidst increasing global uncertainties and the imposition of tariffs by the US. The aim of the WGTI is to achieve this objective, as indicated by reports.
There are various products in which India has the potential to boost exports, including engineering goods, gold jewelry, petroleum products, pharmaceuticals, chemicals, textiles, commercial vehicles, agricultural commodities, and telecommunication equipment as mentioned by government sources.
Reports suggest that the government has solicited feedback from industry stakeholders regarding trade, investment, tariff and non-tariff barriers, and other bilateral concerns between India and Indonesia, to be addressed during the forthcoming meeting.
During the fiscal year 2025, bilateral trade between India and Indonesia amounted to $28.18 billion, with India's exports at $5.38 billion and imports at $22.77 billion. This marked a significant decline from the fiscal year 2023 when bilateral trade reached $38.8 billion, comprising $10 billion in exports and $28.8 billion in imports, as per data compiled by the government.
Studies have indicated that India's reduction in exports to Indonesia was particularly notable in the categories of mineral products and vehicles. As Indonesia’s global imports in FY25 were at $233.66 billion, there is a huge scope for India to increase its exports to the country.
Opportunities for Bilateral Trade
Various industry associations have been invited to provide their insights on the trade prospects between India and Indonesia, as well as the challenges posed by tariff and non-tariff barriers in Indonesia. Recommendations have been requested regarding potential areas for investment collaboration and strategies to enhance trade and investment relations.
Furthermore, India has been advocating for Indonesia's assistance in the ongoing negotiations for the ASEAN-India Trade in Goods Agreement (AITIGA) review. New Delhi is keen on incorporating provisions in the review process, which is still ongoing, aimed at rectifying the trade imbalance with the ASEAN bloc. The trade deficit with the region surged to $45.2 billion in FY 25 from around $7 billion in 2010, when the AITIGA came into effect.
India has noted the comparatively lower tariff reductions offered by certain ASEAN members such as Thailand, Vietnam, and Indonesia, as well as the underutilization of the FTA by Indian exporters, with only 30-40 percent utilization or less.
Japan & India on Trade Reformation
The closure of the Strait of Hormuz, a critical passage for a significant portion of the world's oil supply, has compelled governments in Asia to implement emergency measures to secure fuel and stabilize domestic markets.
In response to the situation, Japan announced the release of 80 million barrels of oil from its national reserves on March 16, 2026. This decision was part of a larger initiative by the International Energy Agency (IEA) to release a total of 400 million barrels globally in an effort to mitigate the impact of the conflict on markets.
Despite these efforts, the price of Brent crude oil soared above $100 per barrel to reach $104.85 by early March 16, marking a 40 percent increase since the conflict began on February 28. Japan, heavily reliant on energy imports, stated that it would not deploy naval forces to the Strait of Hormuz despite calls from the United States to assist in reopening the waterway.
India has encountered severe shortages of liquefied petroleum gas (LPG) and crude oil as exports from the Gulf region declined due to the ongoing hostilities. On March 17, 2026, the LPG tanker ‘Nanda Devi’ arrived at Vadinar Port in Gujarat with approximately 46,000 metric tons of LPG, having navigated the Strait of Hormuz under Indian naval escort. This was the second Indian tanker to return safely as part of ‘Operation Sankalp,’ a naval mission aimed at protecting Indian-flagged vessels in the region. Indian authorities attributed the successful passage of their ships to diplomatic negotiations with Tehran and confirmed that more tankers were on their way. Another vessel, ‘Jag Laadki’, carrying crude oil from the United Arab Emirates, was expected to arrive later that day after narrowly escaping an attack at Fujairah port.
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India's Ministry of Foreign Affairs disclosed that 22 Indian vessels remained in the conflict zone, and efforts were being made to ensure their safe return. Foreign Minister Subramanyam Jaishankar clarified that there was no blanket agreement with Iran for safe passage, indicating that negotiations were conducted on a case-by-case basis. Additionally, the government encouraged households to switch from LPG to piped natural gas to alleviate the strain on limited import resources.
The crisis has not only disrupted air travel and trade routes in the region but has also led to diplomatic shifts. The United Arab Emirates temporarily closed its airspace in response to Iranian attacks, leading to the suspension of operations at Dubai International Airport. Air India and its subsidiary, Air India Express, organized 44 flights to and from the Middle East on March 17 to facilitate the repatriation of Indian nationals and maintain essential connectivity.
The energy shock resulting from the conflict has heightened diplomatic activity. India's Ministry of Foreign Affairs emphasized that its engagement with Tehran was centered on securing energy resources and ensuring maritime safety, rather than aligning with any particular military alliance. Meanwhile, Japan's decision to act independently on oil reserves highlighted the challenges of coordinating collective security efforts amidst the crisis in Asia. These actions by both countries reflect a broader regional trend of prioritizing national energy security over alliance-based strategies.
In conclusion, the energy crisis triggered by the Iran conflict has become a pivotal test for how Asian nations navigate strategic autonomy in the face of global pressures. Japan's reliance on reserves, India's naval diplomacy efforts, and the broader regional pursuit of supply diversification all point towards a future where energy security is increasingly intertwined with national defense, maritime strategy, and geopolitical rivalries.
Korea and Japan Hold Trade Talk, Supply Chain Issues
Korea and Japan reached an agreement to establish a regular communication channel between their industry ministries to better handle various trade, economic security, and supply chain issues, as announced by Seoul's Ministry of Trade, Industry, and Resources. This decision was reached during a meeting between Korean Industry Minister Kim Jung-kwan and his Japanese counterpart, Ryosei Akazawa, held on the sidelines of the inaugural Indo-Pacific energy security ministerial meeting in Tokyo, according to the ministry.
The key objective of this initiative is to thoroughly monitor and address various economic issues, including trade cooperation, economic security, supply chains, and mineral resources, through a proposed policy dialogue in response to the rapidly changing global trade and geopolitical landscape, as explained by the Ministry.
Both countries also formalized a bilateral Supply Chain Partnership Arrangement (SCPA) to increase preparedness for potential disruptions in the supply chain while enhancing their joint response capability by striving to reduce unnecessary trade restrictions that could impact supply chain resilience. Moreover, the SCPA will facilitate closer cooperation between Seoul and Tokyo in joint exploration, investment, and technology development within the critical minerals and resources sector, according to the ministry. Korea Gas Corp and the Japanese energy firm JERA signed an operational cooperation agreement that includes a liquefied natural gas (LNG) swap arrangement between the two companies, as part of the joint effort to strengthen cooperation to ensure stable LNG supplies amidst the instability in the global energy market due to the ongoing turmoil in the Middle East.
Kim expressed Seoul’s commitment to further developing mutually beneficial industrial and trade cooperation between Korea and Japan, in line with the 60th anniversary of the normalization of bilateral diplomatic relations.
Korean, Indonesian Leaders Hold Talk to Enhance Bilateral Cooperation
Reports indicate that President Lee Jae Myung and Indonesian President Prabowo Subianto engaged in discussions aimed at enhancing bilateral cooperation across various sectors during their summit in Seoul.
The topics covered during the meeting, as mentioned by the presidential office, included defense, arms, trade, investment, along with emerging areas of collaboration such as artificial intelligence (AI), infrastructure, shipbuilding, nuclear power, energy transition, and cultural and creative industries.
Cheong Wa Dae announces that the Seoul-Jakarta relationship will be elevated to a distinguished comprehensive strategic partnership, replacing the existing special strategic partnership that was initiated in 2017.
In recognition of his efforts to facilitate the operations of Korean businesses in Indonesia and strengthen relations between the two nations, Subianto was honored with the Order of Mugunghwa, the highest accolade bestowed in Korea.
Discussions are expected to focus on enhancing collaboration within the defense industry, specifically on the joint development of the KF-21 fighter aircraft, a project that Lee has highlighted as a prime example of international defense partnership.
Presidential spokesperson Kang Yu-jung anticipates that they will also address ways to enhance South Korea's partnership with the Association of Southeast Asian Nations (ASEAN), as well as broader security and global issues concerning the Korean Peninsula and the Middle East.
Indonesia, a significant member of ASEAN with the fourth-largest global population and substantial natural resources, is seen as a crucial strategic partner for South Korea.
Seoul and Jakarta initiated a joint effort in 2015 to advance the development of a fighter jet, with Jakarta committing to providing about 20% of the project's funding in exchange for technology transfer.
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Challenges arose due to payment delays on multiple occasions, leading both parties to renegotiate the terms of their agreement. Consequently, Indonesia's financial contribution was adjusted to one-third of the original amount, along with a reduction in the agreed-upon technology transfer extent.
Japan, Singapore Decide to Step up Trade, Economic Cooperation
Japanese Prime Minister Sanae Takaichi and her Singaporean counterpart Lawrence Wong reiterated their dedication to advancing free trade and economic cooperation in light of the destabilizing effects of the United States' tariffs and China's economic pressures on global trade rules. In celebration of the 60th anniversary of their diplomatic ties, Japan and Singapore have opted to elevate their relationship to a ‘strategic partnership.’ Takaichi emphasized the deep bond between their nations, rooted in mutual trust and a longstanding commitment to a rules-based international order and open trade.
In a joint declaration following their meeting, the prime ministers emphasized the significance of their strategic partnership, particularly amidst challenges facing the international security landscape and the multilateral trading system.
Takaichi expressed her desire for Japan and Singapore, positioned at crucial maritime junctures, to collaborate towards the realization of a free and inclusive Indo-Pacific, as envisioned by former Japanese Prime Minister Shinzo Abe in 2016. Wong, who also serves as the finance minister, is currently on his inaugural visit to Japan since assuming office as Singapore's prime minister.
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The leaders additionally pledged to enhance bilateral cooperation across various domains, including energy, security, and digital technology, while engaging in discussions on matters concerning China, North Korea, and the ongoing U.S.-Israel conflict with Iran, as indicated in the statement released by the Japanese Foreign Ministry.