Newsletter 23rd September 2021

Indian exports continue to make a comeback from the lows of the year 2020, but container services are still struggling to keep up with this rising demand.  Because of this, competition for containers is getting fierce and rates are on the rise, despite carrier announcements regarding spot rate caps. Even regional operators have increased the rates drastically since 1st September. Carriers are also giving preference to lightweight cargo when issuing spot bookings, which can be bad news for major commodity exporters like rice, granite, and tiles. The way in which these issues are tackled is set to determine the sustainability of the surging exports from India. For example, non-basmati rice exports from India have slowed during the current quarter, especially to Far-East and South-East Asia, as the region sees new paddy arrivals. Besides, payment trouble with Vietnamese buyers and high freight charges are also contributing to the slowdown.


Despite this, the country is still looking to expand its export volume with trade agreements. The partnership agreement with the UAE is a step towards that. Opportunities in the sugar and rice trade have also been noted and have the potential to be tapped efficiently if existing logistical issues are solved quickly.


We discuss the latest updates below:



Eyeing a deal by December, India & UAE to start FTA talks. (Source)

India and the UAE announced the launch of negotiations for a Comprehensive Economics Partnership Agreement (CEPA) with the UAE joining the United Kingdom, Australia and the European Union among countries with which New Delhi is seeking to prioritise talks for a free trade agreement. The UAE is India’s third largest partner after China and the US with trade estimated at $43 billion last year. A new strategic economic agreement is expected to increase bilateral trade in goods to $100 billion within five years of the signed agreement and increase trade in services to $15 billion. Both sides have drawn up a very aggressive and ambitious time frame and aim to conclude the negotiations by December 2021 itself. 

Indian mills hold off on signing new sugar export deals as local prices jump (Source)

Indian mills are holding off on signing new sugar export contracts for the upcoming season as a rally in domestic prices to a 4-year high widened the gap between local and global rates. Lower shipments from India could support global prices, as supplies from top producer Brazil are expected to decline, and traders were banking on India to compensate for the shortfall. After shipping out a record 7.5 million tonnes of sugar in the current season, Indian mills have so far signed contracts to export 1.2 million tonnes in the 2021/2022 marketing year that starts from Oct.

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India’s exports to the EU declined in the last 20 years, accounts for mere 0.9% of the total imports of the EU (Source)

India’s exports have seen steady growth over the last six months, but bucking this trend trade with the European Union (EU), which is the second-largest export market for India after the USA, has seen a steady decline. According to an analysis by MVIRDC WTC Mumbai, the share of the European Union in India’s merchandise exports has declined in the last 20 years. The share of the European Union in India’s overall goods exports declined from 18% in 2001 to 14% in 2020, even though there was growth in the absolute value of shipments.

India may corner nearly half of the global rice trade as exports soar to record (Source)

India could account for as much as 45% of global rice exports in 2021 as expanded port-handling capacity allows the world’s second largest rice grower after China to ship record volumes to buyers across Africa and Asia. Along with traditional buyers, this year China, Vietnam and Bangladesh are also making purchases from India. The US Department of Agriculture projects global rice exports of 48.5mt in the 2021-22 season.

India was offering a discount of more than $100 per tonne over other exporters, but much of the discount was wiped out by higher demurrage charges tied to the delays, says exporter Brahmananda Gudimetla. To ease the congestion, the southern State of Andhra Pradesh in February allowed the use of an adjoining deep-water port at Kakinada for rice shipments.

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Seawise Capital is a UK based trade finance company, offering factoring facilities to Indian Exporters. We have been operating in India since 2018, and are backed by large institutional US and UK based investors. With our own balance sheet capital, we fund the customers ourselves and have a quick funding process. We have customers all over the world, ranging from small to large scale exporters and we can tailor our solutions based on your requirements. With our fast and fully online process, you can get set up with a facility in less than a week. One of the benefits of working with Seawise Capital over other providers is our flexibility. 

We understand the delicacy of the supplier/buyer relationship, and structure bespoke and cost-effective solutions that work for all the parties involved. We can cover buyers in over 150 different countries, and work with leading credit insurance providers and banking partners to make sure our clients get the best service. 

Get in touch with us, to see how Seawise Capital could help you grow your exports.

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