The Regional Comprehensive Economic Partnership (RCEP) continued to make headlines this week. Ahead of his visit to Bangkok on 11th and 12th October for the final round of RCEP negotiations, Commerce Minister Piyush Goyal stressed that India cannot choose to isolate itself from a large trading bloc like this. The trade among RCEP countries is estimated to be worth $2.8 trillion. Whether India chooses to be a part of this bloc or resists it will hopefully be answered over the weekend. In other news, Credit Suisse, in a report, said that India could be a potential winner from the US-China trade war. The report estimates that sooner or later, global sales of $1 trillion, which includes $350-550 billion of exports, will move out of China if trade tensions continue to rise. With the US and China indicating their willingness to resume trade talks, India’s policymakers and exporters will have to move fast to capitalize on the window of opportunity. The upcoming foreign trade policy may have a roadmap for this, which will be particularly important given the general decline in commodity export forecasts this week.
Trade Update
12TH OCTOBER
# 45
India could potentially be one of the big winners from the US-China trade war, according to a Credit Suisse survey of 100 companies with global sales of $1 trillion that projects $350-550 billion of exports will shift out of China and that this is “inevitable even if slow”. These survey insights land at the same time when US Commerce Secretary Wilbur Ross is saying in New Delhi that India has a “wonderful opportunity right now, to take advantage of trade dissension elsewhere”.
Prospects of an early conclusion of the India-US trade deal have brightened with the two sides reducing their differences and agreeing to allow more goods to be shipped by both countries, besides cutting import duty on contentious items, including high-end bikes like Harley-Davidsons. While an assessment of the gains -- in terms of duty benefits as well as trade volumes -- is being undertaken, an announcement over the next few weeks looks likely.
Software Technology Parks of India (STPI) aims to boost exports from its upcoming 28 Centres of Excellence in the country. STPI plans to establish 28 such centres with eminent focus on software products innovation and R&D. The products designed at the centers will cater to the demand of the domestic market and also strengthen exports. “Over the years, the IT industry has moved up the value chain. Our aim is to create more software products and grab a bigger share of global markets. Currently, our software products exports are valued at $8 billion against the global market size of $500 billion. But by 2025, they can potentially jump to $80-90 billion. Software product innovations have the power of disruption and our planned Centres of Excellence (CoEs) will help boost the development of new products,” said Omkar Rai, Director-General at STPI.
Walmart has announced a pilot to track shrimp imports from India to the USA using blockchain technology. The retail giant plans to track shrimp imports between Andhra Pradesh, a gorgeous coastal region in India’s southeast, and US-based retail warehouses, using blockchain technology developed by IBM. It will feature “end-to-end traceability,” according to a press release issued on 4th October. “The introduction of blockchain in the shrimp supply chain could help improve the quality of information on the product for compliance purposes and for sharing with consumers, providing added traceability beginning at the farm and extending throughout the transportation process,” the company said.
In a meeting held on 10th September, 2019, at Bangkok in Thailand, India and the group of 10 members of the Association of Southeast Asian Nations (ASEAN) have decided to initiate the review of the ASEAN-India Trade in Goods Agreement that has been in operation since January 2010. The main objective of the proposed review is to make the agreement more ‘user-friendly, simple, and trade facilitative for businesses’. It is an important development for India as there has been a growing concern in different quarters, including industry, that the benefits for India have been very limited from the Free Trade Agreements (FTAs) that the country has signed and implemented so far, including that with ASEAN.