It has been a rather quiet week for Indian exports, as stakeholders braced themselves for the Union Budget. However, it has also been a mostly positive week for the sector, with good news coming in from various quarters. The Commerce Ministry announced that it is now seeking the views of all concerned stakeholders in preparation for the next Foreign Trade Policy, while also revealing that the government had greenlit fresh recapitalization of the Export-Import Bank (Exim Bank) of India. Meanwhile, following positive meetings between US President Donald Trump and Indian Prime Minister Narendra Modi at last week’s G20 Summit, the United States Trade Representative (USTR) will send senior officials to New Delhi next week to resume trade talks between the two nations. Resolution of lingering trade tensions between the two will be high on the agenda, especially in the wake of news this week that tea shipments from India to Iran trebled in Jan-April this year, despite US sanctions on the Middle-Eastern nation. At the time of writing this, the Hon’ble Finance Minister Nirmala Sitharaman had yet to announce any key policies/decisions regarding the trade sector as part of the Union Budget. The Budget appears to be more domestic-focused this year; in which case, positive developments such as those mentioned above will likely be important stabilizing influences to calm exporter worry in the coming weeks.
Trade Update
6th July
# 32
The commerce ministry has sought views of all stakeholders for the formulation of the next foreign trade policy (FTP) which provides guidelines for enhancing exports to push economic growth and create jobs. “It has been decided to revise the current foreign trade policy (2015-20). Therefore, suggestions/inputs are hereby invited from all the stakeholders for framing the proposed new FTP,” the directorate general of foreign trade (DGFT) has said in a notice.
India and the US will resume their bilateral trade talks, with senior officials of the United States Trade Representative (USTR) visiting New Delhi next week. Assistant USTR Chris Wilson and deputy assistant USTR Brendan Lynch will be in New Delhi for trade talks, the first after India increased tariffs on 28 American goods following the US putting an end to preferential benefits to Indian exports last month. “Things are moving after the G20 summit. USTR officials will come to India for talks in the next few days,” an official in-the-know of the development told ET.
The government on 3rd July said a number of measures have been taken to support the Indian exports sector. The Government has approved the recapitalization of the Export-Import Bank of India (Exim Bank), an official release said. The Government will issue Recapitalization Bonds to the tune of Rs. 6,000 crore for capital infusion in the Bank, it added. The Government also approved an increase in the authorized capital of the Bank from Rs. 10,000 crore to Rs. 20,000 crore, it added.
Tea exports from India to Iran almost trebled in the first four months of 2019 to 27.09 million kg, a figure that is usually achieved annually, allaying apprehensions that the country might lose out on the market due to US sanctions on the Islamic nation. Price realisation went up 7.54% year-on-year during this period to Rs. 269.62 per kg for orthodox teas. “Importers from Iran have made advance payments for Indian orthodox teas in anticipation that US sanctions may hit tea imports to the country,” Anish Bhansali, managing partner at tea exporting firm Bhansali & Company, told ET.
“In the next six months, we will decimate China in the US market,” says Mahavir Pratap Sharma, Chairman of India’s Carpet Export Promotion Council (CEPC). Sharma’s optimism that Indian carpet exports can replace Chinese carpets in the US market stems from perceived business opportunities that arise for India from the ongoing tariff war between the US and China. Both countries have announced higher tariffs and retaliatory tariffs for a long list of products exported from respective countries recently and Chinese carpets are one such product that has thus become more expensive in the US market.