Election season is in full swing, and as policymakers get caught up in the political cycle, India’s exporters found help in an unexpected place. Two US senators -- John Cornyn and Mark Warner -- asked the US State Department to delay the final decision on India’s GSP eligibility until after the Indian elections are concluded. They hope that the new government will take the issue up on priority, but given the fraught nature of these general elections, there is no guarantee this will happen. In the meantime, Indian exporters will be hoping the US State Department listens to Senators Cornyn and Warner and gives a short reprieve to the worried Indian export sector. Further unexpected good news came from RBI’s monthly trade data release, which revealed that exports actually increased in March 2019, as compared to the same period last year, reducing India’s trade deficit as well. Various sectors such as steel have also posted positive signs of a small revival; however, Indian policymakers recognize that India’s exports are not out of danger yet, and will be keen to resolve longstanding global trade issues at a mini-ministerial meet of the WTO to be held next month. As we move closer to the as-yet-uncertain conclusion of the General Elections, all eyes -- global and domestic -- will be keeping a careful watch on economic indicators from the world’s largest democracy. Given the rather tense state of international trade, economic upheaval in India could be catastrophic, and will be an outcome everyone is eager to avoid.
Trade Update
20th April
# 21
US Senators John Cornyn and Mark Warner have asked the US State Department to delay the issuance of a Presidential proclamation to withdraw India’s GSP benefit “by at least 30 days” beyond the stipulated time in order to move negotiations beyond ongoing elections, which may “serve as a hindrance” for the Indian side. In a letter addressed to US Trade Representative Robert Lighthizer, the co-chairs of the United States Senate's India Caucus said: “As you know, India’s elections will conclude on 23rd May 2019. We believe that the election season may serve as a hindrance for our Indian counterparts in negotiating and concluding a deal on difficult political issues.”
Amid a global trade war, India will hold an informal ministerial meeting of the World Trade Organization (WTO) for a second time in just over a year, starting 13th May, a source said. The two-day mini-ministerial is aimed at reaffirming commitment to preserving a rule-based, multilateral trading system and will likely discuss key issues such as reforms at the Organization, special and differential treatment to developing countries, e-commerce and certain other topics relating to the Doha agenda.
India’s trade deficit narrowed to $10.89 billion in March 2019 compared to $13.51 billion in March 2018 amid increased exports, the trade ministry said in a press note on the evening of 15th April. As per data, exports rose 11.02% to $32.55 billion in March from a year earlier, while imports were up 1.44% yoy to $43.44 billion during the same period under review, data showed. Oil imports rose 5.55% to $11.75 billion, driven by a rise in domestic demand and higher crude prices in global markets.
The performance of the Indian economy in terms of standard economic parameters like GDP, consumption, investment, per capita income, inflation, current account deficit, and fiscal deficit can be termed as reasonably good, specifically while comparing with the result sheets of other economies, advanced or developing. There are, however, concerns on the sustainability of these indices in view of some of the downward risks that emerge on the global scene.
Consul General of China in Kolkata Zha Liyou said on 16th April that his country is keen on balanced trade with India as it is always beneficial and inclusive. There is a greater need for boosting trade and investment between the two countries, he said on economic ties between the two countries. “We do not want to have a trade deficit with India. We want a bilaterally balanced trade as it is always mutually inclusive,” he told the Bharat Chamber of Commerce in Kolkata.