Despite high expectations, the ‘Howdy, Modi’ event didn’t exactly turn out to be the happy moment for India Inc. Local exporters were hoping that the much-touted event would help push US-India trade talks forward. However, discussions between the sides have stalled due to differences over the precise terms of the limited trade pact. A P Maersk further dampened spirits in its April-June India trade report, which pointed out that growth of containerized trade from India slowed to 1%, led by slowing trade growth and trade war-driven rising tensions, along with macroeconomic events like rural consumer distress, tightening liquidity, and a slowdown in key manufacturing sectors. However, a silver lining in this moment of distress is the government's series of announcements aimed at kickstarting the economy and bringing back its original growth levels. One hopes that this boost will suffice to bolster market spirits and restore positive sentiment in the days to come.
Trade Update
28TH SEPTEMBER
# 43
Looking ahead, several initiatives have been put in place and others are being launched on an ongoing basis to enable export industries to regain productivity and cutting edge competitiveness. They include upgradation of export facilities, integration of Indian farmers and their products with global value chains, and trade facilitation measures. More recently, efforts are going into reimbursement of taxes and duties, including an electronic refund of input tax credits in GST.
India is going to be a net exporter of steel for years to come, said Dharmendra Pradhan, Minister for Petroleum and Natural Gas and Steel. Speaking at the first Chintan Shivir: Towards a Vibrant, Efficient and Globally Competitive Indian Steel Sector, Pradhan said, “...Currently, we are importing 2 or 3 million tonnes of steel, in the coming two to three years, India will be a net exporter of steel for a long time to come...India has been purchasing crude oil and gas from so many countries but there is hardly any role of Indian exports in developing the infrastructure there. Now we have started asking them to give preference to Indian steel companies for meeting their needs.”
India’s export-import (EXIM) trade is expected to face continued headwinds in the coming months, A P Moller Maersk said after its April-June India trade report showed the country’s containerized trade growth slowed to 1% (9% in the same period last year). Moller Maersk attributed the steep growth decline to “a cocktail of international factors such as slowing trade growth, and growing trade tensions – coupled with domestic factors like rural consumer distress, tightening liquidity and a slowdown in key manufacturing sectors”.
The Asian Development Bank on 25th September slashed its growth forecast for India for fiscal 2019-20 to 6.5% from 7% projected in July, following weaker growth in the first quarter due to a slowdown in consumption and investment activities that hit manufacturing and service sectors. In an update to its flagship Asian Development Outlook, 2019, ADB said proactive policy interventions along with a recovery in domestic demand and investments will likely see the economy pick up to 7.2% in 2020-21.
Persisting differences over the US demand that India scrap or cut duties on seven ICT products -- including high-end cell phones and smartwatches -- sharply, remove price caps on medical devices like stents and offer greater market access in agriculture and dairy are learned to have delayed a bilateral trade deal. A limited deal was expected to be announced after Prime Minister Narendra Modi’s meeting with US President Donald Trump in New York on 24th September.
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