In a striking shift in global trade dynamics, India has emerged as a formidable player on the international stage, significantly improving its trade balance with eight major regions and regional groupings in the post-pandemic era. This growth is a marked improvement from the pre-pandemic years when India had a favorable trade balance with just six regions.
The findings come from a comprehensive study conducted by the PHD Research Bureau, under the aegis of the PHD Chamber of Commerce and Industry (PHDCCI), which analyzed India’s trade performance over a six-year period, divided into three years before the pandemic (FY 2018-2020) and three years after (FY 2022-2024).
The study, titled “India’s Trade Patterns with Regions and Regional Groupings: A Comparative Study of Pre and Post Pandemic Years,” reveals that India’s export competitiveness and integration into global value chains have seen significant enhancements in recent years. These improvements are largely attributed to proactive government measures, including policy reforms aimed at simplifying the indirect tax regime, improving logistics infrastructure, and minimizing bureaucratic hurdles for exporters.
Government Reforms Propel Export Growth
According to Sanjeev Agrawal, President of PHDCCI, these policy shifts have revolutionized the ease of doing business in India, particularly in the export sector. “Massive investments in export infrastructure, coupled with streamlined processes such as single-window clearances and reduced human interface, have paved the way for a breakthrough in India’s foreign trade trajectory,” Agrawal stated in a recent press release.
The study highlights that India recorded trade surpluses with eight regions in the post-pandemic period, up from six in the pre-pandemic years. These regions include North America, South Asia, European Union (EU) countries, Other European countries, East Africa, North Africa, the Central Asian region, and Central Africa. Notably, both the European Union and Central Asian countries transitioned from trade deficits before the pandemic to surpluses afterward, underscoring India’s growing clout as a major exporter.
Record-Breaking Export Figures
India’s resilience in the global export market is reflected in its record-breaking export figures, which reached an all-time high of USD 776 billion in 2022-23 and slightly increased to USD 778 billion in 2023-24. These figures are a testament to the country’s robust export performance in the face of global economic challenges.
Furthermore, India’s overall trade deficit has improved significantly in the post-pandemic years, narrowing to USD (-)78.1 billion in 2023-24, compared to USD (-)95.8 billion in 2018-19. This improvement highlights the success of India’s export strategies and its ability to enhance trade surpluses with key regions.
Areas of Concern: Rising Trade Deficits
Despite the overall positive outlook, the study also draws attention to some areas of concern. India continues to face trade deficits with 11 regions in the post-pandemic years, including West Africa, Latin America, ASEAN countries, and Northeast Asia. Worryingly, the trade deficit with ASEAN countries has doubled, from USD 19 billion pre-pandemic to USD 35 billion post-pandemic, despite the existence of a free trade agreement signed in 2010.
Agrawal expressed concern over these rising deficits, particularly with ASEAN, and emphasized the need for India to focus on reducing the costs of doing business. “To further enhance our competitiveness in global markets, we must address critical issues such as the cost of capital, power, logistics, land, labor, and compliance,” he said, underscoring the need for continued reform.
The Road Ahead: Towards a $2 Trillion Export Target
As India sets its sights on achieving a USD 2 trillion export target by 2030, the study suggests that the country must continue to build on its post-pandemic trade successes while addressing the challenges that persist. Reducing trade deficits, particularly with key regions like ASEAN, and further improving the ease of doing business will be crucial in sustaining India’s upward trade trajectory.
In conclusion, while India’s post-pandemic trade performance shows significant progress, particularly in its relationships with eight key global regions, there remains a need for vigilance and ongoing reform to fully capitalize on the opportunities ahead.
From: financialexpress
Financial News
