The Philippines is actively pursuing India as a new nickel trade partner, a move that analysts interpreted as an effort to reduce dependence on China and strengthen Manila’s position as a key supplier for New Delhi’s expanding manufacturing industry.
During his visit to India on Monday, Philippines’ Foreign Affairs Secretary Enrique Manalo highlighted his country’s interest in integrating India into its nickel sector. He emphasized that this partnership would not only diversify exports but also support the development of a value chain in processing and manufacturing.
As the world’s largest exporter of nickel ore, a crucial component in lithium-ion batteries, the Philippines exports approximately $1.95 billion worth of nickel annually, contributing 11% of global production. Currently, almost 98% of these exports go to China, while Japan accounts for the remaining 2%.
India, on the other hand, imported $707 million worth of raw nickel from Russia, Norway, and Japan in 2023. Manalo suggested that integrating the Philippines into India’s supply chain would allow both nations to leverage their economic complementarities.
Trade between the two countries grew by 8.6% last year, reaching $3.5 billion. India exports pharmaceuticals, auto parts, and agricultural goods to the Philippines, while Manila supplies electronics, machinery, and precious stones. Manalo noted that there is still an untapped export potential of $577 million between the two nations.
Strategic Trade Diversification
Observers view Manila’s efforts to diversify its trade partners as a prudent strategy, especially given the shifting regional dynamics in the South China Sea and evolving U.S. foreign policy. Matteo Piasentini, a geopolitical analyst and international relations lecturer at the University of the Philippines, noted that this shift predates recent geopolitical changes and stems from a broader concern over U.S. disengagement.
“With the U.S. seeking to secure critical minerals and countries like India enhancing their manufacturing capabilities, the Philippines has an opportunity to position itself as a vital supplier to alternative buyers,” Piasentini explained.
Don McLain Gill, an international relations lecturer at De La Salle University, said that the timing is ideal for both countries. India’s demand for nickel is expected to double by 2030 as it advances its manufacturing sector, making the Philippines a logical trade partner. He emphasized that India’s pursuit of alternative mineral sources aligns with its broader strategy to diversify away from traditional suppliers.
Strengthening Bilateral Relations
Oorja Tapan, a doctoral fellow at the Centre for International Politics, Organisation and Disarmament in Delhi, described stronger ties between India and the Philippines as a step toward counterbalancing China’s influence in the Indo-Pacific region. She highlighted that increased cooperation in defense, economic, and security matters would contribute to a more robust Indo-Pacific strategy for both nations.
Expanding trade relations would also enhance the Philippines’ economic security and solidify its role in sustaining the regional supply chain. In addition to nickel, India and the Philippines have mutual interests in sectors such as information technology, semiconductors, electric vehicles, and infrastructure development.
Defense cooperation between the two countries is also increasing, with India supplying the Philippines with its first BrahMos supersonic cruise missiles in 2024. Tapan noted that Manila may seek a greater Indian role in its security affairs by offering more favorable trade agreements.
Economic and Strategic Implications
India’s expanded engagement with the Philippines aligns with its ‘Look East’ policy, which seeks to enhance regional connectivity and economic growth. However, Piasentini cautioned that deeper trade ties would necessitate a stronger Indian role in regional security to safeguard its growing interests.
Trust remains a crucial factor in trade negotiations, particularly when dealing with critical minerals. “The primary issue with China has been trust, which is why we are working to reduce our market dependence,” Gill stated. “When exporting essential resources like nickel, trust plays a fundamental role in ensuring stability.”
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