As Indians learn how to live with the coronavirus, there is a lot of undoing the country needs to do in terms of economics, especially to boost its contribution to the global supply chain. The country's merchandise exports in April plunged by over 60% year-on-year to US$10.36 billion from US$26.07 billion reported during the same month of the previous year, with sectors such as textile and gems and jewelry marked in red. A recent study led by the United Nations Conference on Trade and Development (UNCTAD) suggests that the global exports of commodities to China may fall by 46% in 2020 due to the coronavirus. Hence, even without the ongoing India-China border dispute and the call to boycott Chinese goods among Indians, the bilateral trade between these nations is likely to suffer in the coming weeks and put global trade in jeopardy. In this uncertainty, all we look forward to is an antidote/vaccine to curb the virus and return normalcy, so one can start to deal with other socio-economic problems as needed.
Trade Update
21ST JUNE
# 74
Labor shortage and scarcity of containers at ports has hit India’s rice exports to Africa, Saudi Arabia, Iraq, Iran and the United Arab Emirates. While Africa imports non-basmati rice from India, the Gulf countries rely on India’s basmati rice for their domestic consumption. “Trucks are standing at the Kandla and Mundra ports for a minimum seven days as there is no labor to unload the trucks,” said Gautam Miglani, owner of LRNK, a Haryana-based basmati rice exporter.
India Ratings and Research (Ind-Ra) believes that the COVID-19 pandemic will stoke a global policy narrative around the realignment of cross-border supply chains, particularly for the pivotal role played by the Chinese economy. However, this realignment will take time to gain momentum. The ability of other emerging markets, including India, to benefit from a shift away from China will be driven by two factors: first, the ability of these markets to provide cost-competitive alternatives, and second, the evolution of trade policy in various importing nations.
COVID-19 continued to subdue global trade and consequently, plunged India’s merchandise exports in May by over 36% on a year-on-year basis. The country’s exports fell during the month under review to $19.05 billion from $29.99 billion reported for the corresponding period of the previous year. The country’s merchandise exports in April had plunged by over 60% YoY to $10.36 billion from $26.07 billion reported for April of the previous year.
Irrespective of the outcome of the call to boycott Chinese products by certain groups in India, India-China trade could be poised for a rough ride. A recent study carried out by the United Nations Conference on Trade and Development (UNCTAD) suggests that the global exports of commodities to China could plunge 46%, by $15.5 billion to $33.1 billion in 2020 if compared with annual growth projections before the coronavirus pandemic hit.
Seafood exporters are anxious about the EU-Vietnam FTA (free trade agreement) that is expected to give Vietnam an export advantage on marine food products vis-à-vis India in accessing EU markets. The EU has totally eliminated the import tariff on frozen shrimp and other shrimps, marked at 4.2% under the GSP (Generalized System of Preferences). Other frozen products such as skipjack tuna, surumi, cuttlefish, and octopus (prepared or preserved) will be totally eliminated from tariffs, official sources said, adding that the import tariff for India for these items ranges from 4.2% to 18.5%