Hope Springs Eternal
After a rather disappointing post-Budget week, stakeholders of the Indian export ecosystem appear to be focused on looking on the bright side. While the Budget was surprisingly underwhelming for Indian exporters and MSMEs, the news this week paints a slightly positive picture for India’s trade relations in the coming weeks. Agri trade to China is on the rise, at the same time as the escalating US-China trade war has also seen a spike in demand from US importers looking for replacements to their Chinese suppliers.
Things are also beginning to look rosier closer back home, with Indonesia’s Trade Minister expressing hopes for a resolution to lingering Indian concerns about the Regional Comprehensive Economic Partnership (RCEP) soon. There are still a few headwinds, such as a global slump in demand for cotton driving down the prices of cotton yarn; however, for the most part, exporters are beginning to focus on future growth prospects.
Commerce Minister Piyush Goyal said after the budget that the Indian export ecosystem need to stop relying on the government for assistance and become more self-sufficient and forward-looking. Weeks like this will definitely help in this process, giving exporters the confidence that hope does indeed spring eternal.
'No incentives for exports in Budget may be part of govt's plan to phase out tax holidays'
The Union Budget 2019-20 has missed specific proposals to boost exports, which signals that the government may phase out tax holidays, according to a tax expert. “(The government) has not provided specific proposals to boost exports,” said Sandeep Ladda, partner and global TMT tax leader at PricewaterhouseCoopers (PwC), in reference to the latest Budget. He added that the government may plan to phase out tax holidays for the economy, which cannot support such sops over a longer period.
Agri exports to China double
Agri exports to China have doubled in FY19 after tariffs were reduced on several commodities. The industry expects that the Chinese market offers a billion-dollar opportunity for exporters of agricultural commodities and products. In FY19, the country exported agri goods worth Rs. 923 crore to China against Rs. 464 crore in FY18, a growth of 99%. In dollar terms, the growth was 83% from $72 million in FY18 to $132 million in FY19.
Looking to replace Chinese imports, US turns to Indian products
Amid rising trade tensions, American importers of sports goods, toys, stationery, cables, and electronics parts have reached out to Indian sellers of these goods as Chinese products become expensive due to the US-China trade war. The US is looking to replace Chinese exports with Indian products in at least seven product lines including vulcanized rubber, footwear, and kitchen accessories. “Importers in the US have shown a keen interest in our products in at least seven tariff lines,” said an official in the know of the details.
Global slump crimps cotton yarn exports
Cotton yarn exports from India have come down by 22% in the first quarter as a global slump in demand and higher prevailing domestic cotton prices loom over the trade. Cotton spinning mills in India are resorting to partial shutdown as a squeeze in demand from China and Bangladesh has accumulated yarn stocks, a potential risk for millers in a dwindling cotton market. “The global cotton yarn demand is under stress as GDP growth in China has fallen and there are recessionary trends in major cotton markets including Bangladesh,” Dr. Siddhartha Rajagopal, Executive Director, Cotton Textiles Export Promotion Council, told ET.
Hopeful of addressing India's concerns in RCEP: Indonesian Trade Minister
The ASEAN troika led by Indonesia had a “fruitful” and “very frank” dialogue with India on the Regional Comprehensive Economic Partnership (RCEP) and efforts are on to address Delhi’s concerns ahead of a meeting on the proposed trade agreement in China later this month, Indonesian trade minister Enggartiasto Lukita has told ET. “Efforts are ongoing to substantially conclude RCEP by end of 2019,” Lukita said after a meeting with commerce and industry minister Piyush Goyal in New Delhi on 9th July.