Old problems, new solutions
India is once again facing old trade issues. According to the trade data released this week, India’s trade deficit for the first 11 months of FY 2018-19 has ballooned to $165 billion, the highest it has been since 2012-13 when it peaked at $190 billion. This has set off warning bells in various sectors of Indian industry, particularly as it is an 11% y-o-y increase compared to the same period last year. Given the trade deficit’s direct correlation with India’s current account deficit and elections around the corner, this is likely to dominate conversations between industry stakeholders in the coming weeks.
However, this time, this old problem may have a new solution -- in the form of fresh trade with the African continent. In a recently concluded conference, Commerce Minister Suresh Prabhu stressed on the importance of building Free Trade Agreements (FTAs) between India and African nations. The Vice President of Morocco’s industry chamber Nabila Friedji also expressed interest recently in establishing Morocco as a “gateway for India’s exports to West Africa”. A boost in trade to the burgeoning African market could surely help offset India’s trade deficit and exporters and policymakers will be watching future developments in this space closely.
Meanwhile, exporters have once again complained about the lack of adequate credit flow to the sector, even as garment exporters praise the central government’s recent rebate scheme. FIEO President Ganesh Kumar Gupta has stressed on the need for more solutions for MSME exporters. Perhaps the government should take inspiration from the success of the rebate scheme for apparel exports, and consider more innovative solutions to boost India’s export sector -- and overall trade.
Trade deficit touches $165 billion, highest since FY13
Rise in petroleum and crude products imports during the first 11 months of 2018-2019 has led to a widening of the country’s trade deficit to $165.6 billion, the highest since 2012-2013. India’s trade deficit has risen to $165.6 billion in the first 11 months of 2018-19, an increase of about 11% compared to the same period of the previous financial year. A report by CARE Ratings shows that the gap between exports and imports is the highest since the 2012-13 period when it peaked to $190 billion.
India, Africa should examine if they can forge free trade pact, says Suresh Prabhu
India and Africa should examine if they can enter into a free trade agreement or preferential trade agreement, Commerce Minister Suresh Prabhu has said. Addressing a conference, the minister said India’s exports of services and merchandise together would touch a record US$540 billion in the current financial year ending 31st March, reflecting its robust economic fundamentals. “Please think about a free trade agreement between Africa and India. We can think about a preferential trade agreement….and the fundamental principle would be how Africa will benefit first and India later,” he said, adding this could be another way of increasing Africa’s share in the global marketplace.
Exporters fret over credit flow
Exporters have expressed concern over the lack of credit to the sector and urged the government and the Reserve Bank of India to take appropriate steps to achieve the target of $375 billion in shipments for the next financial year. “The small and medium enterprise exporters are the worst sufferers and the lack of credit equally affects our export performance,” Ganesh Kumar Gupta, President of the Federation of Indian Export Organisations (FIEO), told The Telegraph.
'Morocco can be India's gateway to Europe, W. Africa'
Morocco could serve as a gateway for India’s exports to Europe, West Africa and the US due to a plethora of trade treaties with several countries and entities, a high-ranking official of the North African nation’s industry chamber has said. “Morocco is included in the European Union’s European Neighbourhood Policy (ENP) which aims at bringing the EU and its neighbors closer,” Nabila Freidji, Vice President of Morocco’s industry chamber, the Confederation Generale des Enterprises du Maroc (CGEM), told IANS during a visit to New Delhi.
Garment exporters hail Union govt’s rebate scheme
Ludhiana’s garment exporters are jubilant over the Union Cabinet’s decision to provide rebate over the state and central embedded taxes to the textile sector. The decision, which was taken by the Union government on 14th March, is being hailed by exporters who are of the view that this will lead to improvement in the garment and textiles exports from India, which were registering a downfall. Executive Council member of the Apparel Export Promotion Council Narinder Chugh said, “This is solely due to the efforts of our organization that this long-pending demand of ours has been fulfilled by the Union government. This decision will lead to garment exporters ending up getting an additional incentive of 3.5-4% on exports which will lead to a revival of garment exports from India which had suffered a huge hit from past some time.”