July 6: India and Indonesia are strengthening their Comprehensive Strategic Partnership through a high-level diplomatic engagement. The 8th Joint Commission Meeting in New Delhi in June 2026, co-chaired by External Affairs Minister Shri S. Jaishankar and Indonesian Foreign Minister Sugiono, focused on expanding cooperation across trade, maritime security, defence, digital connectivity, health, and critical minerals. Indian Prime Minister Shri Narendra Modi is expected to visit Indonesia between 6th and 11th July 2026, highlighting the growing importance of bilateral relations. Defence ties are also expanding, including progress on the BrahMos missile agreement between the two countries.
The Association of Southeast Asian Nations bloc, comprising 11 countries, accounted for about 11% of India’s total tradein FY2026, underscoring the bloc’s importance as a key trading partner. Among them, Indonesia is an important partner, ranking second in total goods trade among the ASEAN bloc. Key Highlights of India’s Merchandise Goods Trade with Indonesia
Declining exports and imports highlight the urgent need to improve trade dynamics Sharp decline in exports: India’s goods exports to Indonesia fell from USD 10.0 billion to USD 4.5 billion , more than halving over the period, with a steep CAGR of -23%, reflecting sustained export weakness.
Gradual moderation in imports: Imports from Indonesia declined from USD 28.8 billion to USD 20.3 billion, with a CAGR of -11%, indicating that import demand has also fallen but at a relatively slower pace than export demand. Overall contraction in total trade: Bilateral goods trade declined from USD 38.8 billion to USD 24.8 billion , registering a -14% CAGR, driven mainly by falling exports and moderating imports.
Narrowing trade deficit gap for India: India’s trade deficit with Indonesia improved from USD 18.8 billion to USD 15.8 billion, narrowing gradually as both exports and imports declined, though the imbalance remains significant.
Exports diversify as petroleum dominance fades
India’s exports to Indonesia underwent a major restructuring between FY2023 and FY2026. The share of refined petroleum products fell sharply from 39% to 5%, indicating a significant erosion of earlier export dominance. In contrast, frozen bovine meat (3% to 7%), auto components (2% to 4%), groundnuts (3% to 4%), and unmanufactured tobacco (0% to 3%) gained share, while “others” expanded to 77%, with broader but more fragmented export diversification. Overall, the export basket is shifting away from energy products toward agri and industrial goods.
Imports remain commodity-driven with gradual diversification
India’s imports from Indonesia remain concentrated in key commodities, particularly coal (30%) and palm oil (19%), though coal’s share has declined significantly by 20% from FY2023 to FY2026. Indonesia, the world’s largest producer and exporter of palm oil, continues to be a critical supplier for India’s edible oil demand. Of all products imported by India from Indonesia, palm oil accounted for 19% in FY2026. In fact, Indonesia is India’s largest palm oil supplier with a 40% share in FY2026. Emerging categories, such as stainless steel (3% to 6%), industrial fatty acids (2% to 3%), and semiconductors and diodes (0% to 2%), indicate gradual diversification, while “others” rose to 40%. Despite this, imports remain largely resource-driven with a strong dependence on key commodities.
