JOIN USExports revive after a long pause
India’s exports turned the corner in 2018-19 after remaining muted since Prime Minister Narendra Modi-led government came to power.
Trade balance with China improved too but the needle did not move much on nine out of 15 Regional Comprehensive Economic Partnership (RCEP) countries.
Exports growth hovered around $300 billion from 2014 to 2018, with two years of slide in 2016 and 2017 but the share of exports in gross domestic product (GDP) plummeted a steep five percentage points to 19.05% in these four years.
The commerce ministry said that growth in exports have not been commensurate with GDP growth because of global slowdown leading
to lower demand in international markets and lower commodity prices, currency fluctuations, non-tariff barriers by export destination countries, cost of credit, logistics costs and so on.
But despite all the headwinds, India was able to correct to a certain extent its trade ties heavily skewed in China’s favour.
Trade deficit with China reduced to 33.28 billion in the first seven months of 2018-19 compared to over $36 billion in the same period last year. But this has not raised much hope of finishing the year on an optimistic note as economists opine the one time correction could be due to adverse trade relations between the USA and China of late. .
Over the years, China has become India’s largest trading partner but the balance of trade is heavily tilted in favour of China.
Last year, India imported $76.38 billion worth of goods and services but exported a measly $13.33 billion worth of that. Last year’s imports from China were the highest since 2014, consequently the trade deficit too was the widest.
The government said increase in imports of electronics, machinery, organic chemicals, plastics, instruments and appliances from China in 2018 widened the trade gap.
Among RECP members, India had a trade surplus with only five countries – Cambodia, Myanmar, The Philippines, Singapore and Vietnam. RECP bloc comprises 10 ASEAN members (Brunei, Cambodia, Indonesia, Malaysia, Myanmar, Singapore, Thailand, The Philippines, Laos and Vietnam) and their six FTA partners – India, China, Japan, South Korea, Australia and New Zealand.
Now the problem is that RECP members want India to reduce customs duty heavily on their products entering Indian market. The negotiations are continuing and there is one more round in February next year.
However, with SAARC countries, India has a trade surplus.