According to experts, with the rising global demand, India should be able to compete in various segments vis-a-vis China.
India’s exports to its top trading partners such as the United States, European Union, nations in West Asia, among others, are expected to rise. Exports data during the first 6 months of the current fiscal year is indicative of the fact that external demand has been robust. Exports from India have been rising consistently over the last few quarters, after dropping for a few months as the outbreak of Covid-19 pandemic disrupted global trade.
India’s export growth prospects are likely to get a boost from the (WTO) World Trade Organization’s latest report that now sees a brighter global merchandise trade outlook compared to its earlier projections. India exported goods worth US$33.44 billion in September, up by 21.35% year-on-year, which witnessed a 28.51% jump over September 2019. Outbound shipments worth US$197.11 billion were exported, during April-September, up nearly 57% YoY. It also hit nearly half of this fiscal’s export target of US$400 billion set by the government.
According to DK Srivastava, chief policy advisor, EY India, China is facing supply-side as well as demand-side issues owing to several internal challenges (energy, debt crisis). Therefore, India is in a good position to increase its exports and has a chance to become a substitute for China across various product categories or sectors. India can take advantage of the increasing global demand, which can ultimately translate into demand for Indian exports.
According to a WTO report, global goods trade is expected to grow by 10.8% as compared to the forecast of 8% in March, but with varied recovery, depending on the region. The report also states that the export volume growth in 2021 will be 8.7% in North America, 7.2% in South America, 9.7% in Europe, 0.6% in the Commonwealth of Independent States (CIS), 7% in Africa, 5% in West Asia and the highest for Asia at 14.4%.
On the other hand, imports are expected to grow at a faster rate as compared to exports. Inbound shipments into North America are set to grow by 12.6%. It will be 19.9% in South America, 9.1% in Europe, 13.1% in CIS, 11.3% in Africa, 9.3% in West Asia and 10.7% in Asia.
While the growth looks better in 2021, which is due to a low-base effect caused by the outbreak of the pandemic, recovery looks uneven as compared to 2019. Over that period, export growth will be negative in North America, CIS, West Asia and Africa. Positive growth can be seen in Asia, Europe and South America at 14.7%, 1% and 2.2%, respectively. The report also pointed out spikes in inflation, longer port delays, higher shipping rates, and extended shortages of semi-conductors, as some of the risks were associated with the forecast.