India Becomes Indonesia’s Third-Largest Export Destination in Q2 2025 amid Global Trade Realignment: Rubix Data Sciences
As Indonesia adapts to shifting regional and global trends, the Rubix report identifies strong fundamentals—fiscal prudence, structural reform, and a rapidly expanding digital backbone—that position the country to remain a key growth engine for ASEAN.
Despite US tariff pressures and slowing exports, Indonesia’s economy stays resilient as policy reforms, digital investment, and shifting trade partnerships define its 2025 trajectory.
Mumbai, November 14: India has emerged as Indonesia’s third-largest export destination in Q2 CY2025, overtaking Japan as Southeast Asia’s largest economy navigates a complex global trade environment, according to the latest Country Insights Report by Rubix Data Sciences.
Indonesia’s growth remains steady despite external headwinds. The report notes GDP expanding 5.12% in Q2 CY2025, the fastest pace in two years, before moderating to 5.04% in Q3. Achieving the government’s full-year growth target of 5.3% will hinge on Q4 performance, as softer household spending and weaker export demand weigh on momentum. The IMF maintains a positive outlook, projecting GDP growth of 4.9% in CY2025 and CY2026, and 5.0% in CY2027.
Trade Rebalancing and India’s Rising Role
Trade patterns in early 2025 show a clear realignment. Indonesia’s imports outpaced exports, driven by strong domestic demand for capital goods and raw materials. China remains Indonesia’s largest trade partner, accounting for 31% of imports and 24% of exports, while India climbed to third place among export destinations.
A key driver behind this shift is the 19% US tariff imposed on Indonesian goods in July 2025, which is pushing Indonesian exporters toward lower-tariff, high-growth markets like China and India.
However, bilateral India–Indonesia trade has softened. Goods trade fell from USD 38.8 billion in FY2023 to USD 28.2 billion in FY2025. India’s imports from Indonesia declined 11% annually, led by reduced coal purchases and evolving palm oil policies. Indian exports to Indonesia have halved over two years, though petroleum products now form a growing share of outbound shipments.
Domestic Reforms Bolster Investor Confidence
To counter external pressures, Indonesia is accelerating structural reforms. Key measures include:
- A 75% reduction in minimum paid-up capital requirements for foreign companies
- Six new Special Economic Zones, including the country’s first Halal Hub in East Java
- Completion of the EU–Indonesia CEPA, eliminating tariffs on 98% of trade lines, benefiting textiles, palm oil, and automotive sectors
Complementing these reforms is a decisive push toward digital transformation. The National AI Roadmap (2025–2045) aims to produce 100,000 AI professionals each year, strengthening Indonesia’s competitiveness in AI-driven innovation. The new risk-based business licensing regulation (GR 28/2025) introduces a “deemed approval” mechanism to improve transparency and ease of doing business.
“A Test of Resilience and Reinvention in 2025”
“The year 2025 has tested Indonesia’s external resilience while highlighting its internal strengths,” said Mohan Ramaswamy, Co-Founder & CEO, Rubix Data Sciences. “Even as export headwinds and new trade barriers test its resilience, the country’s policy reforms, digital ambitions, and trade diversification are laying the groundwork for a more balanced and future-ready economy.”
A Stable Path Ahead
As Indonesia adapts to shifting regional and global trends, the Rubix report identifies strong fundamentals—fiscal prudence, structural reform, and a rapidly expanding digital backbone—that position the country to remain a key growth engine for ASEAN. Its ability to leverage market diversification, execute policy reforms, and nurture technology-driven productivity will be critical to sustaining long-term economic stability.
