How the scenario of Global Trade can be improved
Present circumstances:
- Recent trade statistics released by the Ministry of Commerce and Industry show that India’s exports are still falling.
Notable trade-related information:
- July saw a roughly 16% decline in merchandise exports, which came to $32.25 billion, a nine-month low. Furthermore, merchandise imports fell by 17% to $52.9 billion.
- So far this fiscal year, the volume of exports and imports for the first four months (April through July) has dropped by 14.5% and 13.8%, respectively.
- A fall in non-oil exports and imports suggests weak domestic and global demand, even though reduced commodity prices can be partially blamed for the loss. These are worrying signs.
Trade reductions by sector and region:
- An analysis of the data shows that, between April and July, 19 out of the top 30 export commodities saw declines.
- Included in them are also labor-intensive businesses like textiles, leather goods, jewellery, and stones.
- Nonetheless, this fiscal year’s electronic exports have climbed by 37.6% thus far, maintaining their sharp rise.
- A Crisil research claims that India’s exports have decreased more than anywhere else in the Asia Pacific region.
- In the first two months of the fiscal year, exports to APAC fell by 21.8%, while exports to the US (12.9%), Africa (8.6%), and Europe (6%), in that order, all saw a decrease.
- According to this statistics, India’s product exports to APAC have decreased since the epidemic began.
- In 2019, the region made up 33% of India’s merchandise exports; however, by 2022–2023, that percentage had dropped to 26%, while the US and EU’s combined share had risen to 34%.
The condition of the world economy will affect India’s exports:
- Short-term export losses will persist as a result of declining demand and trade worldwide.
- The International Monetary Fund’s World Economic Outlook study projects that global economic growth will be 3% this year, down from 3.5% in 2017.
- Furthermore, it is projected that the growth in the volume of goods and services traded globally will slow down from 5.2% to 2% this year.
- In fact, growth this year is now predicted to be 0.4 percentage points lower than the IMF’s first estimate.
The government has implemented the following measures to boost exports:
- The Foreign Trade Policy (2015–20) is in force until March 31, 2023.
- Additionally, till March 31, 2024, the Interest Equalization Scheme on Rupee Export Credit for Pre and Post Shipment has been extended.
- Two of the programs that provide support to encourage exports are the Trade Infrastructure for Export Scheme (TIES) and the Market Access Initiatives (MAI) Scheme.
- The Rebate of State and Central Levies and Taxes (RoSCTL) Scheme was implemented on March 7, 2019, with the aim of promoting labor-oriented textile exports.
- A Common Digital Platform for Certificate of Origin has been created in order to encourage trade and increase exporters’ utilization of the Free Trade Agreement (FTA).
- Twelve Champion Services Sectors have been formed to promote and diversify services exports through the implementation of focused action plan.
- The Districts as Export Hubs initiative has been launched with the goal of finding items in each district that have the potential to be exported, removing exporting barriers, and helping local manufacturers and exporters create jobs in the region.
- Indian embassies overseas have been actively promoting India’s trading, tourism, technology, and investment goals.
Actions to Do:
- Investment in the infrastructure sector: Increasing export competitiveness requires investing in infrastructure and logistical improvements.
- Priority should be given to investments in India’s ports, transportation networks, customs processing, and export-oriented infrastructure, such as export promotion zones and specialized industrial zones.
- This can reduce the cost of transportation, improve the efficiency of the supply chain, and boost export potential.
- Technology Adoption and Skill Development: To expand the pool of competent personnel accessible in export-oriented sectors, skill development programs should be implemented.
- Productivity, competitiveness, and innovation in the export sector can also be increased by promoting and supporting the use of technologies like automation, digitization, and Industry 4.0.
- Examining Joint Development Programs: Given the wave of deglobalization and the slow pace of economic progress, exports cannot be the only driver of growth.
- India should explore joint development ventures in sectors such as semiconductors, solar energy, and space with other countries to increase its prospects for medium-term prosperity.
Way Forward:
- The goal of policy should be to increase merchandise exports while considering the broader economic implications, such as those on job creation and the current account.
