Data reveals that the two economies have been steadily increasing their bilateral trade in recent times. There has been a drastic increase in the value of bilateral trade between India and the Philippines, increasing by more than 80 percent since 2015-16. The trade was valued at USD 1895 million in 2015-16, which rose secularly to reach the USD 3530 million mark in 2024-25. By March 2024, India’s exports to the Philippines stood at $350 million, while imports from the Philippines were $92.3 million.

However, it is widely believed that the existing full trade potential has not been realized between the two economies. Given the growth trajectory, growth resilience, and complementarities between the two, there is a need to further facilitate trade between them.

As it unfolds, earlier this August, the President of the Republic of the Philippines, Ferdinand R. Marcos Jr. paid a State Visit to India. The visit not only had a diplomatic significance but also became an important milestone for South-South Cooperation in trade and commerce. Diplomatically, it was a celebration of the seventy-fifth year of the establishment of India-Philippines formal relations, and an opportunity to acknowledge the long-standing friendship between the two, enshrining the ideals of mutual respect, trust, and shared values and culture. Economically, it was an opportunity to chart out the future course of trade and commerce, among other things, in a world being obliterated by tariffs and other trade geopolitics.

Hence, promotion of business and commercial linkages, while unlocking greater economic opportunities, acquired a central theme in the bilateral conversations of the two leaders. This is a welcome move toward steadily growing the value of the bilateral trade beyond the USD 3.5 billion with concerted efforts.

Understanding from the lens of trade economics, such sustained growth in trade is feasible when the two parties exploit the principle of comparative advantages, leverage complementarities, and focus on economies of scope by expanding the basket of traded goods and services. Moreover, to instil trust and formalise the bilateral relations, tools like the Preferential Trade Agreement (PTA) help in reducing any kind of coordination failure, while expediting the transactions to reduce inefficiencies. This was well reflected in the commitment between New Delhi and Manila to conclude the negotiations for the Preferential Trade Agreement (PTA) between India and the Philippines to further bolster mutual trade, along with collaborating for two-way investments.

Often, the bilateral (or multilateral) ties face issues in achieving desirable outcomes due to coordination failures caused by minor conflicts in accessing markets, disruptions in supply chains, etc. Thus, further reducing the chances of any coordination failure and ensuring cooperation in trade, the leaderships decided to put in place mechanisms to ensure regular meetings and exchanges between the senior officials from the respective counterpart ministries, facilitate early resolution of market access issues, and foster greater integration with global supply chains. This also involved facilitating the Joint Customs Cooperation Committee meetings for improved trade facilitation through simplified customs procedures. Moreover, bilateral efforts are also underway to lay a robust foundation for new old (traditional) as well as new areas of collaboration. In the traditional sector, potential for business between India and the Philippines includes expanding trade in agribusiness commodities like cacao, coffee, mangoes, bananas, coconuts, rubber, bamboo, fruits and nuts, palm oil, and other high-value crops. Moreover, in the service and manufacturing sector, identified fields for exchanges include medical, financial, and legal services, game development, engineering design in manufacturing, software development, pharmaceutical sector, tools and dyes, furniture, garments, among others.

Indeed, there is a vast scope for tapping trade potential in intra-industry trade, particularly agriculture and manufacturing sectors. However, the prospects for forging ties in relatively newer non-traditional fields are also immensely positive. Identifying this, the leadership is in negotiations to exploit the scope for collaboration between the two economies, in non-traditional and technology-driven fields like renewable energy, critical minerals, electric vehicles, digital technologies and Artificial Intelligence, robotics, ICT, and biotechnology. Moreover, the action is being taken to boost intra-industry trade in the creative industry and startups, construction and infrastructure, iron and steel, shipbuilding and ship repair, agriculture, and tourism.

Another way of strengthening bilateral commerce agreed upon and underway is by encouraging business and industry representatives via soft measures/ commercial cultural exchanges between the two economies. These measures include exploring opportunities offered by either side through the exchange of business delegations, while ensuring more Business-to-Business contacts via trade fairs and business conclaves in both countries.

India’s Act East Policy has significantly bolstered India’s engagement with the Philippines, with specific cooperation on trade and industry. The Philippines also holds trade ties with India in identifying new areas of cooperation, whether in traditional sectors of trade and economics or the latest segment of collaboration, such as in digital technology, fintech, health, among others. Thus, India-Philippines exchange is an example of coming together of emerging market economies (EMEs) to explore the scope, potential, and economic opportunities.

The relation is also exemplary of how the South-South cooperation is ever-evolving. The new era of cooperation is not just about the exchange of agricultural and manufactured goods; it is also about AI, health, financial investments, and supply chain management. The intra-industry trade’s scope between the two has widened and upgraded in terms of value, volume, technology, capital, and labour embodiment, as well as supply chain dynamics. The bilateral ties of the two economies are not ushering in a space of one-sided dependence, but it is flourishing in the space of mutual interdependence, knowledge sharing, development cooperation through trade, and cooperation building.