Informist, Thursday, Apr 25, 2024

--Source: Trade min held brainstorm Apr 16 to discuss export decline

--CONTEXT: India FY23 exports dn 3%, first decline since FY21 pandemic

--Source: Trade min-exporters meet saw need for fixing internal issues

--Source: Trade min meet discussed credit, logistics cost, FX movement

--Source: Trade min to study peer econs' internal factors for trade

--Source: Trade min to study broad export hurdles, then go pdt-wise

--Source: Trade min meet takeaways to be part of govt 100-day agenda

By Krity Ambey and Sagar Sen

NEW DELHI – The one big worry India's policymakers are facing, one on which they do not have full control, is the issue of dwindling exports. Looking to steer exports out of the woods in the current financial year, the commerce ministry held a brainstorm session with exporters last week and concluded that the only way out was to address the internal macroeconomic issues hindering growth in exports, said an industry source who attended the meeting.

Amid concern over global demand and supply disruptions due to geopolitical tensions, the country's merchandise exports shrunk in the financial year ended March - the first time since the pandemic year of 2020-21 (Apr-Mar). In a bid to arrest this decline, Commerce Secretary Sunil Barthwal called for a 'chintan shivir' with exporters on Apr 16 to discuss the main hurdles as also the way out.

The meeting took up issues, including the cost of credit, logistics and production, as well as currency movement, the source said. The takeaways from the 'chintan shivir' will be a part of the ministry's 100-day agenda if the Narendra Modi government returns to office after the ongoing General Elections that end early June.

The source said the key idea will be to do a comparative analysis with other similarly-placed Asian exporters, including those from Thailand, China, Bangladesh, and Malaysia. For instance, the government will compare the cost of credit available to the exporters in India with that available to the exporters in other countries, the source said. It will also compare the currency movement in these countries and its impact on that country's trade.

The meeting was about introspecting and identifying the problem areas, the source said, adding: "Identifying and rectifying internal issues can help in this geopolitical environment when we have little to no control over external factors."

Currently, a major worry for the commerce ministry is the escalated conflict in West Asia and the disruption of shipping lanes in the Red Sea. Tensions in West Asia flared up earlier this week, with Iran launching 300 drones and missiles targeting military sites in Israel. Moreover, since November, Iran-backed Houthi rebels have been targeting container ships passing through the Red Sea--a route that accounts for 30% of global container traffic--in a show of support to the militant Palestinian group Hamas. This development has forced shipping vessels to take a longer route around Africa, which is driving up freight costs.

"We will start with looking into macro issues, which are across sectors," the trade source said. "In the next level, we will go product-wise. For example, the cause for disability (factors hindering export growth) of Indian apparel vis-a-vis apparel from Bangladesh."

Streamlining internal hindrances can help boost exports of low value-added and high-volume products, the source said. Low value-added and high-volume products include cotton, jute, and some farm products. "The internal macro factors don't affect sophisticated sectors’ products too much," the source said.

India's merchandise exports declined for the first time in three years in 2023-24, posting a little over 3?ll to $437.06 bln. Imports, after having grown in double digits for two consecutive years, declined 5.4% to $677.24 bln. Consequently, India's trade deficit was $240.17 in 2023-24, compared with $264.90 bln in the previous year.

Government departments are currently giving the final shape to their 100-day agenda, a list of measures for the first 100 days of the new regime. The Modi government has said the 100-day agenda will help it meet the 'Viksit Bharat' or developed economy target by 2047. End

Edited by Ranjana Chauhan

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