TRADE UPDATE #48

Trade in a No-Deal World

15/11/2019

The Indian decision to pull out of the Regional Comprehensive Economic Partnership (RCEP), while perhaps unexpected, is nevertheless momentous. The country’s refusal to be part of the mega-FTA puts the focus squarely back on its trade relationships with ASEAN and its members. In fact, a study by the PHD Chamber of Commerce and Industry has concluded that this trade could double in the next five years. On the other hand, Indian shrimp exporters are already beginning to see positive negative effects of the withdrawal, with China making import regulations tougher.

The government is definitely cognizant of the challenges posed by adopting this independent approach. MSME Minister Nitin Gadkari revealed this week that the Centre is working on a credit-rating system for the country’s MSMEs that will help define lending norms for them more clearly. He also said that the sector’s contribution to India’s exports basket should rise further. The decision to pull out of the RCEP will likely make this goal and others like it more challenging, but opportunities continue to exist.

The rationale behind the Indian decision was that the country’s concerns over the impact of cheap foreign imports on its local manufacturers were not addressed sufficiently. Valid though that point may be, it goes without saying that isolationist and insular trade policies will do more harm than good in the long run. In today’s increasingly connected global world, India will have to find the right balance between protecting its domestic manufacturers and aiding its exporters -- a balance that will be key to trade in a world without the RCEP’s benefits.


BILATERAL TRADE

India-Asean bilateral trade may double by 2025 to $300 billion: Study

With India pulling out of the Regional Comprehensive Economic Partnership (RCEP), the country’s existing engagement with ASEAN is back in focus with an industry study suggesting that India’s bilateral trade with the ASEAN economies would double by 2025 to $300 billion from the current level of $142 billion (2018). The study conducted by PHD Research Bureau, PHD Chamber of Commerce and Industry, said that concentration of India’s exports items to ASEAN economies is very high in the top 20 commodities that presents scope for further diversification of India’s exports basket to such economies.


COMMODITY

RCEP exit may hit shrimp exports

Indian seafood exporters fear non-tariff barriers by China, currently one of the main buyers of Indian shrimp, after India’s recent withdrawal from the Regional Comprehensive Economic Partnership (RCEP). “They have started to check consignments for white spot syndrome virus (WSSV) which they never have done before. We suspect they are bringing the controls after India’s exit from RCEP,” said Anwar Hashim, Managing Director of Abad Fisheries, adding that the virus is present in almost all the shrimp producing nations except in Canada and Australia.


POLICY

Govt formulating policy on credit ratings for MSMEs: Nitin Gadkari

The government is in the process of formulating a policy on credit ratings for micro, small and medium enterprises to help investors and other players take informed decisions, Union Minister Nitin Gadkari said on 11th November. Addressing the International Women’s Entrepreneurial Challenge Foundation, Gadkari said MSMEs contributed 49% of India’s total exports. The event was organised by the FICCI Ladies Organisation (FLO).


MSME

MSME share in exports should rise to 60%: Nitin Gadkari

Micro, small and medium enterprises (MSMEs) in the country must understand the needs of the foreign market and design their products accordingly to be able to increase the sector’s share in India’s exports to around 60%, Union Minister of MSMEs Nitin Gadkari said. Currently, MSMEs contribute around 49% to the country’s exports. “We have a target that at least 60% of our export comes from MSMEs,” Gadkari said at the inauguration of the 39th Indian International Trade Fair in New Delhi on 14th November.


COMMODITY

US-China trade war is good news for India’s this export business

The ongoing US-China trade war provides huge opportunities to leather exporters to increase their shipments to America, CLE said on 14th November. Council for Leather Exports (CLE) Chairman P R Aqeel Ahmed said the sector’s exports grew about 7% to the US in the past four months.”The trade war gives huge opportunities to the sector to further explore the US market,” he said at the National Export Excellence Awards.


OTHER NEWS

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