NEW DELHI: Confronted as it is with uncomfortably high crude oil prices, steadily accelerating global economic growth could give India a hand to hold on to in the next few quarters.
With the IMF revising global growth forecasts upwards by 0.2 per cent to 3.9 per cent for 2018 and 2019, economists expect India’s exports to receive a substantial boost. However, dangers from domestic disruptions like the persistence of GST teething issues continue to exist.
Ratings firm Crisil, in a recent report noted both the opportunities that exist for an export upswing and factors that could derail that boost. “Global growth, taken in conjunction with the continuing efforts at ironing out GST-led disruptions, should improve trade prospects for India in 2018. The labour-intensive sectors of gems and jewellery, textiles, and leather, which were most hit by the disruption, therefore can stand to gain in 2018,” it noted. All three are major export sectors.
Indian exporters are also hopeful of a quick ramp up pushed along by strengthening global trade. Ravi P Sehgal, chairman of the Engineering Exports Promotion Council (EEPC) had pointed out heading into 2018 that the boom “promises to be full of opportunities and growth for the Indian exporters” while stating that it is imperative that Indian exports gain competitive pricing and technological strength.
“Global trade has grown at a faster clip than the overall world output growth, as the US, Eurozone, Japan and China are witnessing a resurgence in economic activity. All these markets are very important destinations for the Indian export basket,” Sehgal pointed out.
However, Crisil also warns that if domestic disruptions continue, “India could stand to miss the bus again in 2018 which can be a huge setback to domestic growth recovery”. GST related cash flow bottlenecks are being ironed out, however, several still exist according to exporters. “We have to ensure that our exporters should not miss out any global opportunity for the sake of cash flow,” Sehgal had noted.
Other challenges exist, like logistical bottlenecks. Bibek Debroy, chairman of Prime Minister’s Economic Advisory Council points out in a report that it takes more than six days to export from India. India had also slipped in the World Bank rankings on cross-border trade, even as it climbed 30 ranks overall. Nearly 70 per cent of import/export delays are due to port or border handling processes.
If India can harness the global trade boom, it stands to benefit from stronger global economic and trade growth in 2018 and 2019.