Trade with all major regions down
While imports from China reduced, exports to the US suffered as Trump administration cut off India’s duty-free access
The Covid-19 pandemic that spread across the global from late January, along with sluggish international trade, affected India’s major export markets in the previous financial year, latest official data shows.
In 2019-20, India’s trade with South Asia, Asean (Association of Southeast Asian Nations), the Gulf nations, China, and North America reduced. This was primarily because export orders and finalised shipments were cancelled in major segments, such as engineering goods, electronics and textiles, in the prime trading months of January to March.
Trade with Asean, which had consistently seen the best growth for exports, sank 10 per cent while the highest fall was seen in trade with South Asia, a market India had high hopes from. Imports from the region had stabilised over the last three years but had been on an upswing since 2018-19 due to Chinese shipments being moved through the region, particularly Vietnam, government estimates say. But the pandemic and India’s skirmishes with China along the Ladakh border have restricted the flow.
Even before the latest bout of violence on the border, trade with China had gone down as overall imports from China had reduced due to lower amount of inbound electronic shipments.
On the other hand, according to people in the know, exports to the US have suffered since the Donald Trump administration cut off India’s duty-free access to the American market under its largest preferential trade scheme — the Generalized System of Preference —in 2019.
Now, the US has hinted that India needs to hold off on its plans to raise tariffs on key imports from the country.
Trade with the nations of the Gulf Cooperation Council, which includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, took a hit due to the slowing economy of the region.
The United Arab Emirates (UAE) has consistently been India’s largest export destination but cheaper goods from competing nations had eroded that position recently.
As of August, nascent signs of a recovery have been evident. India’s exports contracted 10.2 per cent in July, slightly lower than June’s 12.4 per cent fall, as trade of major foreignexchange earners such as petroleum, gems, electronics, and textiles remained subdued. But overall, trade experts say, there may soon be growth in trade.
“Business/order enquiries from almost all major economies like the US, EU, Canada, Japan, South Korea, Australia, and New Zealand have helped in bringing the exports sector to almost 90 per cent of the level in July 2019,” said Sharad Kumar Saraf, president of the Federation of Indian Export Organisations (FIEO).
But estimates for the full 2020-21 remain rough as merchandise trade volume are already estimated to have contracted 14 per cent in the first half of 2020, and may see an overall 13 per cent decline in 2020, according to the World Trade Organization (WTO).