Trade Sector Updates – Falling Exports, TIES, MEIS, Foreign Trade Policy, etc.

[op-ed snap] India’s export woes

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing much

Mains level : Falling Indian exports

Context

India’s October trade figures deepen concerns about the health of our export sector. 

Figures

    • Merchandise exports fell 1.1% from a year earlier to $26.4 billion last month. 
    • Though it is smaller than September’s 6.6% decline, it’s still bad news. 
    • Exports have been stuck in negative territory for three months in a row. 
    • The good news is the sharp decline in the trade deficit to $11 billion in October from $18 billion a year earlier. 
    • This was due to a 16.3% decline in imports, to $37.4 billion.

Reasons for poor export growth

    • GST – Exporters had to suffer inordinate delays in the refunds due to them under the goods and services tax regime. 
    • RCEP – India’s decision to walk out of the RCEP, which will make access to a vast, rapidly-growing market difficult for them. 
    • Bilateral trade – bilateral trade deals are far not encouraging. India’s trade differences with the US are making matters worse. 

To revive exports

    • Policy – India has to reshape its policy mix in various ways. 
    • Manufacturing – Local manufacturers need to be competitive globally. 
    • Tax – recent reduction in corporate tax is a good move on the financial front. 
    • Tariff reduction – exposure to foreign competition requires lowering import tariffs, not raising them. 
    • Export-oriented reforms – needs to be undertaken.

Conclusion

But for these steps, India risks missing the opportunity to grab the global value chains disrupted by the US-China trade war.

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