The Philippines is encouraging India to procure nickel for battery manufacturing, as the Southeast Asian nation seeks to reduce its dependence on China. Filipino Foreign Minister Enrique Manalo highlighted this opportunity while addressing the Federation of Indian Chambers of Commerce and Industry (FICCI) on Monday. Manila, currently reliant on China for 98% of its nickel exports, is looking to diversify its market and strengthen trade relations with India.

Strengthening Trade Ties and Nickel Sector Development

Manalo emphasised the need to expedite negotiations for a preferential trade agreement (PTA) between India and the Philippines. He expressed Manila’s interest in engaging with Indian businesses in sectors such as automobiles, IT services, pharmaceuticals, healthcare, and agriculture.

The push for a stronger economic partnership aligns with India's growing demand for critical minerals needed for battery production, particularly for electric vehicles (EVs). India has been securing agreements with resource-rich nations like Australia and Argentina to reduce its reliance on China, which currently dominates the supply chain for rare earth materials.

Philippines: A Key Player in Global Nickel Supply

The Philippines contributes 11% of global nickel production and was the world's second-largest producer of the metal in 2023. Manalo underscored the significance of the country’s nickel sector, stating, “The Philippines is the world’s largest exporter of nickel ore, with exports valued at approximately $1.95 billion, mainly used in lithium-ion battery production.”

Currently, almost all of the Philippines' nickel exports are directed to China, with Japan accounting for the remaining 2%. Manalo noted that India could play a crucial role in diversifying the country’s exports while also participating in the processing and value-chain development of its nickel industry.

Expanding Bilateral Trade and Investment

India has been importing raw nickel from Russia, Norway, and Japan, amounting to approximately $707 million. Manalo suggested that shifting some of these imports to the Philippines could create a mutually beneficial trade realignment. “This represents a natural complementarity between our economies that remains largely unexploited,” he said.

He also called for an acceleration of PTA negotiations, which began about two years ago, as a means to enhance commercial ties between the two nations. Additionally, he invited Indian automobile manufacturers to take part in the Philippines’ vehicle modernisation program.

“We believe India has significant untapped potential as a market for Philippine exports,” Manalo stated, citing an estimated export potential of $577 million. “Transitioning from scoping exercises to actual trade negotiations will drive growth upward.”

Current Trade Relations and Economic Outlook

In 2024, trade between India and the Philippines was valued at $3.5 billion, marking an 8.6% increase from the previous year. The trade balance remains in India’s favour, with the country exporting pharmaceuticals, automotive components, and agricultural products, while the Philippines supplies electronic goods, machinery, and select agricultural commodities.

Manalo also promoted the Philippines as an investment destination, citing its 5.8% economic growth in 2024. Projections indicate further growth between 6% and 8% through 2028. He highlighted regulatory reforms, including a competitive 20% corporate income tax rate for registered businesses and VAT exemptions for export-oriented enterprises, as key incentives for investors.

As the Philippines seeks to diversify its export markets, its push for stronger trade relations with India presents a strategic opportunity for both nations. With India’s increasing focus on securing critical minerals for EV production and Manila’s openness to trade realignment, a strengthened economic partnership could benefit both economies. Expedited PTA negotiations and enhanced bilateral trade cooperation could pave the way for deeper commercial engagement in the years ahead.