As per the report, India has become Indonesia’s third-largest export destination in the second quarter of 2025 amid trade shifts. It has surpassed Japan, as global trade realigns following shifting tariffs and changing energy trends. Notably, Indonesia, which had ranked India fourth at the end of 2024, witnessed India surpass Japan slightly in early 2025 and sustained that position through the June quarter. Furthermore, according to the report, Indonesia’s exports to the US rose by 2.5 percent in Q2 2025 compared to the previous quarter. In contrast, exports to China increased by 8.8 percent and to India by 9.6 percent.
Trade shifts patterns of the countries such as India and Indonesia
Interestingly, the analysis, covering trade until June 2025, popped out just before the United States imposed a 19 per cent tariffs on Indonesian goods in July. The report noted that future trade patterns may see exporters strategically redirect shipments towards higher-growth, lower-tariff markets such as China and India. Indonesia stays competitive among ASEAN peers due to its low production costs and diversified exports, including coal briquettes and palm oil, despite the new US tariffs.
India’s imports from Indonesia decreased at a compound annual rate of 11 per cent. Apparently, coal briquettes continued to dominate India’s imports basket, though their share dropped from 43 percent in FY2020 to 34 per cent in FY 2025. The move reflects India’s growing focus on renewable energy and efforts to decrease reliance on coal-based fuels.
Indonesia lifted its export levy on crude palm oil from 7.5 per cent to 10 per cent. India is anticipated to import more than 5 million tonnes of palm oil in 2025 compared to 4.8 million tonnes in the lastyear. The higher levy could increase import costs and push domestic prices higher to encourage sourcing from other countries. At the same time, India’s exports to Indonesia nearly halved, dropping from USD 10 billion in FY2023 to USD 5.4 billion in FY2025, registering a 27 percent annual decline. The report outlined that petroleum exports witnessed a growing share, signaling trade shifts. The reduction was mainly witnessed in items like shelled groundnuts, frozen beef, and dredging vessels.
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