International trade is expected to slow down both internationally and domestically according to a report by the Confederation of Indian Industry.

The report titled ‘India’s Exports: Trends, Challenges and Future Strategy’, said that this slowdown traces itself to an increase in protectionism across the world, as the ongoing US-China trade war shows. “Also there has been a slowdown in growth in the EU region. Additionally, due to a lack of nominations, the appellate body of the WTO has only one remaining member. These actions together have resulted in a slowdown of international trade,” the report said.

The report said that imports were negatively impacting the domestic capacity at the present, and it was also negatively impacting plans for increasing the capabilities in domestic industries and augmenting capacity. Iron and steel, non-ferrous metals, chemicals and petrochemicals are among the major industries raising these issues.

The report also noted that there is no clarity on import of intermediates. “Industry is aware that a number of imports are used as intermediates and value addition is done in India. However, there is no clarity on how much of the import is happening because the domestic capacity is lacking, versus cost competitiveness.”

Losing market access

In addition, India has lost its preferential market access in two of its largest export destinations — the US and EU.

India has graduated out for most products it used to export to the EU through the EU’s GSP programme. This has impacted its textile exports.

Also, as on June 2019, the US has withdrawn all GSP benefits to India. While in terms of percentage of trade volume this will be small, in terms of total trade, it is potentially around $ 5 billion worth of exports while India’s retaliatory tariffs are only on products worth a few million dollars, the report said.

Addressing problems

Among its recommendations, the CII suggested developing new schemes to help diversify export markets and products.

Speaking at the CII- Exports Summit 2019, Minister for Commerce and Industry, Piyush Goyal said that the NIRVIK scheme also known as Export Credit Insurance Scheme (ECIS) is an initiative of the Government meant to address the problems of export financing that industry was facing.

Goyal also noted that the government is stepping up engagement with the EU, the US and the UK separately, to secure markets for Indian exports even as it withdrew from the Regional Comprehensive Economic Partnership.

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