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Slowing global trade growth may impact Indian export |
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NEW DELHI: India's sliding export performance may be difficult to arrest as the World Trade Organization has cut global trade growth forecast for 2015 to 3.3% from 4% earlier.
"We expect trade to continue its slow recovery but, with economic growth still fragile and continued geopolitical tensions, this trend could easily be undermined," he said. The Geneva-headquartered WTO estimates growth to recover to 4% in 2016.
In 2014, international trade grew by 2.8%, much less than the original forecast of 4.7% and also lower than the revised forecast of 3.1% estimated by WTO last September. The trade organisation said strong exchange rate fluctuations, including a 14% appreciation of the US dollar against other currencies between July and March, complicated the trade situation and outlook, besides the slowing GDP in emerging markets and uneven recovery in developed countries.
In services exports, India fell two places to eighth position in 2014, down from sixth in the previous year. India was overtaken by Japan and the Netherlands even as the value of the country's commercial services exports went up to $154 billion from $151 billion. In order to give a push to its services exports beyond IT/ITES, the government is organising a global exhibition on services in the third week of April.
India's ranking in merchandise exports remained unchanged at 19 in 2014, with a share of 1.7% in global exports at $317 billion. China was the top exporter with a apshare of 12.5%, posting a 6% growth. With WTO slashing its global trade growth forecast it may be difficult for India to boost exports significantly. The country's merchandise exports had contracted 15% in February due to global slowdown as well as the appreciation of the rupee against a basket of currencies. Merchandise exports account for about one-fifth of the country's $2-trillion economy.
India announced a five-year foreign trade policy to give a concentrated push to both merchandise and services exports to help double total exports to $900 billion by 2019-20. Government announced tax incentives under Merchandize Exports from India Scheme (MEIS) and Services Exports from India Scheme (SEIS), which is in the form of fully transferable duty credit scrips with reward rate ranging between 2% and 5%.
Exporters can use these scrips to offset service tax, excise duty or customs duty. Calendar 2014 was the third consecutive year in which global trade grew less than 3%. Growth averaged 2.4% over each of the last three years, the slowest rate on record for a three year period when trade was expanding. WTO's Azevedo, however, said, "We are not powerless in the face of this gloomy picture.... By withdrawing protectionist measures, improving market access, avoiding policies which distort competition and striving to agree reforms to global trade rules, governments can boost trade and seize the opportunities that it offers for everyone."
Lower prices for oil and other primary commodities provide some upside potential to the forecast if their positive impact on net importers of these products outweighs their negative impact on net exporters, WTO said in a release. It said any recovery in demand in the European Union would have a disproportionate impact on world trade statistics due to the fact that trade between EU members is counted in global totals.
Source : economictimes.indiatimes.com
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