TRADE UPDATE #46

Fighting Slowdown Woes

18/10/2019

In a further sign that fears and rumors of an economic slowdown may be true, the RBI’s trade data for September revealed a 6.5% year-on-year drop in India’s exports. However, this was also reflected by muted trade globally too; India’s imports fell in September too, resulting in a narrowing of the trade deficit. Concern over slowing international trade was also reflected in the World Economic Outlook report released by the International Monetary Fund (IMF); apart from predicting continued economic pain worldwide, the report also specifically cut India’s growth forecast for FY20 to 6%, a sharp drop from the 7% forecast in July.

Apex exporters body Federation of Indian Export Organizations (FIEO), in recognition of these warnings, has urged policymakers for an immediate deliberation and drafting of the newly launched Remission of Duties or Taxes on Export Products (RoDTEP) scheme for boosting Indian exports. After all, exports are more than just an indicator of the financial health of the country; they also have very real-world effects like job creation, as a new study points out this week.

Sources say that this week’s informal meeting between Chinese President Xi Jinping and Indian Prime Minister Narendra Modi bodes well for strategic ties between the two neighboring economies. Perhaps it is time the two countries bury the proverbial hatchet and focus on mutually beneficial trade to fend off the impending economic slowdown.


TRADE

Exports decline 6.5% in September

Exports of goods declined for the second straight month in September, by 6.57% year-on-year, to $26.03 billion, as outbound shipments of petroleum products and labor-intensive goods such as engineering items, gems and jewelry, readymade garments and leather products continued to fall. The trade deficit narrowed to $10.86 billion in September 2019 from $14.95 billion in September 2018 as imports fell 13.85% during the month to $36.89 billion.


ECONOMY

IMF cuts India’s FY20 growth forecast to 6%

The outlook for the Indian economy for the current fiscal seems to get bleaker by the day as major economic forums and institutions have of late revised the country’s GDP forecast downwards, with the International Monetary Fund (IMF) being the latest in the fray. The IMF, in its World Economic Outlook released on 15th October, cut its forecast for GDP growth for the financial year 2019-20 to 6%, a sharp revision from its previous outlook of 7% growth, released in July.


TRADE

Exports From SEZs Growing Tremendously: PHD Chamber

Exports from SEZs are growing tremendously, increased from US$5 billion in 2006 to US$100 billion in 2018, along with a high rate of growth in investments and generation of new employment opportunities for the growing workforce in the country, said the industry body PHD Chamber of Commerce and Industry. A whopping growth of exports from SEZs has been registered at 1,900% from 2006 to 2018. Employment creation in SEZs has increased from 1.4 lakh people in 2006 to more than 21 lakh people in recent times (June 2019), said the industry body PHDCCI.


POLICY

FIEO calls for urgent deliberation of new tax scheme to boost Indian exports

Sharad Kumar Saraf, President of the Federation of Indian Export Organisations (FIEO) on 16th October asked for an immediate deliberation and drafting of the newly launched Remission of Duties or Taxes on Export Products (RoDTEP) scheme for boosting Indian exports. The exporters’ body expressed its concern over the declining trend in exports due to trade tensions as it will negatively impact the growth of the Indian economy.


OPINION

How exports drive domestic job growth

As the RCEP negotiations reach a conclusion, the sentiments about the free trade mega-deal remain divided in India. On one hand, there are fears of India’s trade deficit worsening once markets open to the Asia-Pacific. But, on the other hand, India risks losing out on benefits from participating in global value chains and new research suggests that this could well be the case because export growth is associated with greater employment.


OTHER NEWS

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