The central government’s announcement of the next stage of India’s lockdown to fight the COVID-19 pandemic has provided much-needed relief to Indian industry. Dubbed ‘Unlock 1.0’, the plan calls for phased reopening of manufacturing and local industry to restart the country’s growth engine. Coupled with the new ‘Atma Nirbhar Bharat Abhiyan’, policymakers are keen to get India’s economy growing again, and their renewed push to boost local manufacturing will likely help India’s exports sector too. There are already proposals for investment of $16-17 billion (around Rs. 1.25 lakh crore) being considered to boost certain local manufacturing sectors. Commerce Minister Piyush Goyal has indicated that manufacturing revival and export diversification will be key in the coming months, even as Foreign Secretary Harsh Vardhan Shringla highlighted the opportunity for India to establish as a key low-cost manufacturing and trade hub in the post-COVID world. With commodity exports to China set to plunge in 2020, according to a new study by UNCTAD, it is imperative that Indian exporters capitalize on the coming opportunities to expand into new and existing markets. The government has already announced the extension of incentive scrips for exporters for an additional three months. It is time the industry seizes the moment and uses ‘Unlock 1.0’ to realize the full potential of India’s export ecosystem.
Trade Update
7TH JUNE
# 72
The government is considering proposals for investment of $16-17 billion (around Rs. 1.25 lakh crore) to boost domestic production of air conditioners and their components, furniture, and leather footwear, while looking at options, including duty hikes, to reduce import dependence and push exports. “To increase manufacturing, ‘Make in India’, and employment, priority sectors have been identified and work has started in three -- furniture, air conditioners, and leather footwear. Just in case of air conditioners, we import over 30% of our demand. We need to reduce this quickly. Similarly, we have a small share in global exports, despite being the second largest leather producer,” PM Narendra Modi said at CII’s annual session.
India’s Minister for Commerce & Industry and Railways Piyush Goyal recently said the three key ways to raise the country’s exports are to revive manufacturing, diversify the export basket and find newer and more accepting markets. He was speaking at the Digital Summit on Exports organised by the Confederation of Indian Industry (CII) and the EXIM Bank of India. The ‘Atma Nirbhar Bharat’ mission, he said, is not just about greater self-reliance, but also engaging with the world from a position of strength, according to an official release.
India recently extended the validity of scrips, or certificates provided under export incentive schemes, which are expiring between 1st March and 30th June this year, till 30th September, the Directorate General of Foreign Trade (DGFT) said in a public notice. The Foreign Trade Policy provides tax incentives for goods and services under the Merchandise Exports from India Scheme (MEIS) and Services Exports from India Scheme (SEIS).
Foreign Secretary Harsh Vardhan Shringla, without naming China, which has emerged as the manufacturing hub of the world, has suggested that countries “will be looking for maximum diversification of their production and supply chains in the medium to long term, weaning away from extreme dependence on any one particular country or region”. He emphasized that this phenomenon provides India with an important opportunity to develop itself into a low-cost manufacturing hub which will position India as the preferred investment destination.
Global commodity exports to China could plunge up to 46%, by $15.5 billion to $33.1 billion, in 2020 due to the coronavirus crisis, according to research by the UN trade body. The UN Conference on Trade and Development (UNCTAD) said that the findings raise concerns for economies that rely on exports of primary goods, such as energy products, ores and grains. The UNCTAD research found that the global exports of commodities to China could plunge by $15.5 billion to $33.1 billion in 2020, a drop of up to 46% compared with annual growth projections before the coronavirus pandemic hit.
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