TRADE UPDATE #79

Living Amidst a Pandemic

25/07/2020

As overall demand continues to be subdued, global economies are cautiously taking measures to limit the economic impact of the pandemic and begin a gradual recovery. With lockdowns being eased in the USA and European countries, South Asian exporters have started to receive fresh orders. However, whether they are able to service these orders depends on the country and the restrictions on its supply chains.

In other news, Indian Commerce Minister Piyush Goyal hinted at a possible trade deal with the US, saying, “We are almost there.” According to Reuters, with this deal, India is eyeing concessions for its generic drugs exports to the US against opening up its dairy markets and slashing tariffs on farm goods. India is also looking at restoring zero tariffs on a range of exports to the US under the Generalized System of Preferences (GSP), which were withdrawn last year.

While the above move could give a big boost to businesses exporting to the US, especially in the pharmaceutical sector, the domestic dairy industry is likely to take a hit. Having said that, very few details about the India-US trade deal are known to the public, and it is a bit early to determine the impact of it on both the economies.


EXPORTS

Current account, exports and Atmanirbhar

For the first time in decades, India turned in both a trade and current account surplus. But that’s no reason to cheer as the surplus was due to depressed demand for gold, fuel and machinery. When a country runs a current account surplus, it sells more goods and services than it purchases. In other words, it’s a net lender with surplus forex to invest overseas. It also boosts employment due to higher domestic demand.


EXPORTS

South Asian economies on way to re-emergence in export markets

Exports from South Asian nations are showing signs of a gradual recovery from the devastating effects of the COVID-19 pandemic, with global retailers beginning to receive canceled or held orders as lockdowns are being eased in the West. Success in retaining the recovery, however, will depend on how the countries in the region undertake measures to halt the spread of the virus and reset economic policies to revive their struggling economies under a new global perspective, economists have pointed out.


COVID-19

Made in India ventilators for COVID-19 much cheaper, carry huge exports potential

Many small firms in India have remodeled their operations to manufacture ventilators as coronavirus cases continue to rise. Importing a ventilator costs nothing less than Rs. 10-20 lakh, thereby making it nonviable for most hospitals. Sudhir Waghmare, owner of medical devices company Shreeyash Electro Medicals, who has been in the business of manufacturing new born life-saving devices since 2006, never looked at adult ventilators as he believed that it would take the focus away from his core business.


BILATERAL TRADE

India, US closing in on trade deal: Piyush Goyal

India and the United States are closing in on a trade deal, Commerce Minister Piyush Goyal said on 21st July, after two years of negotiations. “In the long term, I believe we have a quick trade deal which has some of the pending matters built up over the last couple of years, which we need to get out of the way quickly. We are almost there,” Goyal said at the US-India Business Council’s India Ideas Summit, being conducted virtually.


COMMODITY

Covid fallout! Indian shrimp exports likely to decline in 2020 as global demand falls: Report

Indian shrimp exports are likely to contract during the current calendar year, as global offtake of the product falls across key consuming countries including China, USA and Europe, according to a report by rating agency ICRA. Global demand for shrimp is estimated to contract by 20% due to the COVID-19 pandemic around the world followed by localized demand disruptions, it said in the report. There may be considerable volatility through the year, ICRA said.


OTHER NEWS

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