Fall in demand from major trading partners such as the US, rising trade costs, protectionism, commodity price volatility and changes in trade policies by major trading partners or geopolitical developments are risks to India’s export opportunities and market access, according to the Economic Survey 2023-24, even as trade deficit is expected to decline further due to the expansion of the production-linked incentive schemes scheme and the recently signed free trade agreements (FTA).
After a gap of nearly 10 years, India has inked four new FTAs between 2021 to 2024. These FTAs are with Mauritius (signed in February 2021), the UAE (February 2022), Australia (April 2022) and the European Free Trade Association or EFTA (March 2024)
“The risks to the performance of India’s external sector are on the downside due to the persistence of current geopolitical tensions and policy uncertainty,” it said.
Noting that it is “critical to explore what these changing paradigms mean for India”, the Survey said that policies need to be a mix that straddles security concerns with economic considerations.
“India’s push towards manufacturing in complex and niche sectors through schemes such as PLI and Make in India aims to balance these goals. On the other hand, India’s edge in services will catalyse our globalisation over the coming years,” it said.
It highlighted that global economic growth and international trade are passing through a particularly challenging phase of uncertainty and hence, open, inclusive, predictable, non-discriminatory, and mutually beneficial trade can provide an impetus to economic growth.
As per the Survey, the resilience of global trade is being tested by disruptions on two of the world’s leading shipping routes- the Panama Canal and the Suez Canal. The Panama Canal handles 6 % of global trade and over 70 % of traffic destined for or originating from the US. It is presently operating at partial capacity due to freshwater shortages, with restrictions
likely to remain in place for some time. Meanwhile, the Suez Canal handles about 12 % of global trade and about one-third of container shipping between Asia and Europe.
Source Name : Economic Times