From UPSC perspective, the following things are important :
Prelims level : Nothing much
Mains level : Falling Indian exports
India’s October trade figures deepen concerns about the health of our export sector.
- 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.
But for these steps, India risks missing the opportunity to grab the global value chains disrupted by the US-China trade war.