Cambodia-India Relations Under the Spotlight Converging Towards Promoting Trade Ties

Khoun Theara

January 26, 2018

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While bilateral trade between Cambodia and India, the world’s 7th largest economy, remains modest in relative terms, Prime Minister Hun Sen’s official state visit to India this week gives credible optimism for a bolstered trade relationship between the two countries.

India’s historical contact with Cambodia can be traced back to as early as the 1st century AD, which has been broadly embedded in the latter’s cultural, social and political structures. Their diplomatic relations were officially established in the 1950s and have remained quite healthy thereafter, in exception of the Khmer Rouge era. This is given the shared value of non-interference and neutrality in the international arena, combined with their strong commitment to regional integration and multilateralism, especially via ASEAN multifaceted platforms. Both countries signed a bilateral trade agreement in 2002, with India agreeing to unilaterally provide Duty Free Tariff Preference Schemes to Cambodia in 2008 covering 94% of India’s total tariff lines. Additionally, provided that India is the world’s second most populous country and a major global economic powerhouse, there is significant potential to boost economic cooperation.

Despite all of this, however, bilateral trade and investment remains marginal. According to the statistics of Cambodia’s Ministry of Commerce, Cambodia’s total trade with India amounted to only USD$112 million in 2016, compared to USD$5.1 billion with China, USD$2.3 billion with the United States and USD$3.5 billion with the European Union. Cambodia imports mostly drugs and pharmaceutical products from India while exports back primary products such as non-ferrous metals. In total, Cambodia had a trade deficit of USD$89 million with India in 2016.