The State of Foreign Trade: #TalkingTrade
Center for the Study of Finance and Economics (CSFE), IMPRI Impact and Policy Research Institute, New Delhi presents IMPRI #WebPolicyTalk – A Special Conversation Series – The State of Foreign Trade: #TalkingTrade
India’s foreign trade accounted for 33.5 % of its GDP during 2010-2020 (ADB, 2020). The yearly trend of merchandise trade from 2014-15 to 2020-21 shows an increase in both exports and imports from 2015-16 to 2018-19. Both started declining since 2018-19. During 2020-21, India’s total merchandise exports and imports are US$291,106 million and US$393,599 million, respectively. Both exports and imports have declined by 7.10 and 17.09 percent year-on-year, respectively.
In recent years, India’s top export partners have been the USA, China, UAE, Hong Kong, and Bangladesh, while its top import partners have been China, the USA, UAE, Switzerland, and Saudi Arabia. The top five products exported by India are Petroleum products, Drug formulations & biological, precious stones, iron & steel, and electric machinery and equipment, meanwhile, the top products imported by India are crude petroleum, gold, petroleum products, precious stones, and coal, coke & briquettes, etc.
During 2020-21, India’s total service exports and imports were US$205, 270 million, and US$118,450 million, respectively. Both exports and imports have declined by 3.72 and 7.66 percent year-on-year, respectively. The yearly trend of service trade from 2015-16 to 2020-21 shows a consistent increase from 2015-2016 to 2019-2020. However, it started declining from 2020-21.
According to ADB’s Free Trade Agreements (FTA) database, 13 of India’s trade agreements (inclusive of comprehensive economic partnership agreements (CEPA), preferential trade arrangements (PTA), and regional trade agreements (RTA)) are in effect while 17 agreements are under negotiation. Foreign trade is regulated by foreign trade policy (FTP), which is being revised every five years. The policy incorporates provisions relating to the export and import of goods and services. At present, FTP (2015-2020) is in force. The major provisions under current FTP are:
- Trade facilitation, a major goal
- Niryat Bandhu-Hand holding scheme for new export/import entrepreneurs
- Citizen’s charter is in place including online complaint registration and monitoring system, issue of electronic exporter-importer code, electronic bank realization certificate project, electronic procedure to create exporter importer profile, facility of online filing of applications, online inter-ministerial consultation, electronic data interchange system, introducing SWIFT (Single Window Interface for facilitating trade), AEO programme is in place, undertaking of time release study at various customs locations, facility of deferred payment of customs duty.
- Establishment of National Committee on Trade facilitation.
As various efforts have been taken by the government to facilitate India’s trade, the data on Trade Facilitation Indicators (TFIs) provided by the Organisation for Economic Co-operation and Development (OECD) indicates that the overall trade facilitation performance of the country has increased from 1.50 in 2012 to 1.63 in 2019.
Impact of COVID-19 on India’s Trade
Exports declined from US$330,078 million in 2018-19 to US$313,361 million in 2019-20 and further to US$291,106 million in 2020-21. Imports also declined from US$514,078 million in 2018-19 to US$474,709 million in 2019-20 and further to US$393, 599 million in 2020-21. There is no adverse impact of COVID-19 on services as it has only increased during the pandemic.
Based on these facts, it is important to see how India’s declining export and import can be strengthened. What new can be done to control the declining trends in trade, diversifying export basket and export destinations?
With the above in mind, IMPRI Center for the Study of Finance and Economics (CSFE) has launched a #WebPolicyTalk series – The State of Foreign Trade: #TalkingTrade.
The series The State of Foreign Trade – #TalkingTrade will consist of 45-minute #WebPolicyTalk sessions with thematic experts, policymakers, and practitioners in the field of foreign trade and economics, to learn about their work and its relevance in addressing challenges facing foreign trade, especially amid the COVID-19 pandemic.
These sessions will be available on social media platforms such as Facebook, YouTube, Spotify, and Google Podcasts. Each #WebPolicyTalk will be followed by a brief report capturing the highlights for widespread dissemination, which will be available on the IMPRI website.
Prof Nalin Bharti
Professor, Humanities and Social Sciences, Indian Institute of Technology, Patna
The series is being organized by the IMPRI Center for the Study of Finance and Economics (CSFE).