NEW DELHI: India’s merchandise exports, which are showing signs of slowdown on the back of insufficient global demand, higher oil prices and a growing wave of protectionism, besides the rise of tariff wars, are expected to continue experiencing muted growth, say experts.
According to official data, merchandise export growth was a meagre 0.64 per cent in April 2019 at $26.07 billion, marginally up from $25.91 billion reported a year ago.
Though some experts believe China’s loss in trade war might aid India expand its market, many more seem to believe this to be a misnomer. Partly because China may undercut India in its markets in a bid to sell produce that it cannot sell in the US, and partly as India’s export basket does not have the capability to match the advanced manufacturing export basket of China.
“While China’s export basket is more advanced and consists of more finished manufacturing goods, India’s consists more of raw materials and semi-finished goods. As the tariff war continues, it is unlikely that India will gain significantly in the international market at the expense of China,” pointed out economist Abhijit Mukhopadhyay.
For instance, the initial phase of the US tariff imposition targeted Chinese steel and aluminium exports. In this area, Chinese exports are almost eight times than India’s. There is ergo a slim chance that Indian metal exports will benefit from reduction in Chinese metal exports.
On the contrary, analysts say that China is already dumping its surplus of steel and aluminium exportables in markets other than the US, including India. Even in the domestic market, Indian steel and aluminium manufacturers have forced the government to carve out a tariff wall to protect them from low-priced Chinese products, explained analysts.
“China is already our competitor in a large number of products including textiles and steel and this competition will intensify as they will try to grab larger market shares elsewhere in the world to make up for losses in US sales,” said Prof Biswajit Dhar of JNU.
China will try to utilise the rest of its export market penetration to countries such as Vietnam and Bangladesh, where it has a visibly overwhelming edge over India.