TRADE UPDATE #56

Road To Budget 2020

24/01/2020

Earlier this week, the International Monetary Fund (IMF) cut India’s FY20 growth forecast to 4.8% citing the domestic slowdown and NBFC crisis. With the economic slowdown and fall in exports dominating headlines, stakeholders are hoping that the government will think out-of-the-box and announce a few innovative measures in the upcoming budget to revive trade in the country.

On the exports front, industry influencers are seeking export promotion schemes that focus on research and development along with technology upgradation to build capacity and competitiveness across sectors. Such a move will help SMEs integrate into the global value system and hopefully boost both domestic and international trade.

On the other side, Brazilian President Jair Bolsonaro is on a four-day official state visit to India. He will be honored as the chief guest at the Republic Day parade on 26th January. President Bolsonaro is also expected to meet Prime Minister Narendra Modi and discuss several matters in hand. Chances are that these world leaders could announce several initiatives to promote bilateral trade between Brazil and India.


BILATERAL TRADE

From trade ties to multifaceted relationship: On agenda during Brazil president’s India visit

India on 21st January formally announced the state visit of Brazilian president Jair Bolsonaro, during which he will be the chief guest at the annual Republic Day parade on 26th January. Inviting a world leader as the chief guest at the Republic Day parade is an honor reserved for India’s closest allies and friends. In recent years, the invitation has been accorded to former US President Barack Obama, the leaders of the 10 ASEAN nations and South African President Cyril Ramaphosa.


INTERNATIONAL TRADE

Sectoral focus could lift exports by $100 bn-$150 bn in 10 years

India can achieve an incremental gain of around $100-150 billion over the next decade if the government focuses on accelerated export growth in sectors such as chemicals, footwear, furniture, and textiles, finds a study. India would do well if it improves on the issues related to sector-specific tax issues, infrastructure and trade relationships to gain dominance on these sectors for the long term. “We estimate India’s exports in chemicals, footwear, furniture and textiles to increase to $200-300 billion over the next 10 years. India could potentially gain around $100-150 billion over the next decade through these sectors if the focus is shifted towards accelerated exports growth,” said a study by Kotak Economic Research.


BUDGET 2020

Budget 2020-21: FIEO wants 'Double Tax Deduction Scheme' for MSMEs in the budget

With Budget 2020-21 announcements around the corner, like other Industry Associations, the Federation of Indian Export Organisations (FIEO) has too released their wish list for the upcoming budget. A Double Tax Deduction Scheme for Internationalization of Micro Small and Medium Enterprises (MSMEs), an Exports Development Fund and capacity building in the health sector are some of the issues included in FIEO’s budget wish list which they want to be considered by the Finance Ministry.


ECONOMY

Is Indian economic slowdown responsible for global slump? Economists say no

Indian economists have refuted the International Monetary Fund’s controversial remark that a slump in the Indian economy has affected global growth. IMF’s Chief Economist Gita Gopinath had on 20th January said at the World Economic Forum underway at Davos that India was primarily responsible for the downgrade in global growth. When asked the extent to which the economic slowdown in India had impacted global forecasts, Gita Gopinath said, “Simple calculation says it would be over 80%.”


BILATERAL TRADE

India and Russia: Impact on Trade Ties as Delhi Eyes Eurasian Economic Union FTA

India and Russia are currently engaged in discussions concerning a free trade agreement (FTA) between India and the Eurasian Economic Union (EAEU), which consists of Russia, Armenia, Belarus, Kazakhstan, and Kyrgyzstan. There are good reasons to believe this will happen in 2020 as these markets offer Indian manufacturers and producers access to a combined EAEU market of 173 million people, while acknowledging that Russian businesses are less likely to be as disruptive to the Indian market as say for example the China alternative.


OTHER NEWS

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