Over the past few months, there has been a high degree of optimism regarding India’s export prospects, with commerce minister Piyush Goyal setting a target of $400 billion for FY22. India’s exports surged on the back of consistent recovery of the global economy, especially in the country’s main export destinations. The US and China, the two largest export destinations, expanded by 6.6% and 8% respectively in the second quarter of 2021. India’s exporters must override uncertainties to maintain the exceptional growth in exports recorded in the first half of 2021.
The capital infusion in ECGC is a step that can help. The Trade minister expects capital infusion in ECGC to enable it to expand its coverage to export-oriented industries, particularly labor-intensive sectors. The approved amount will be infused in installments thereby increasing the capacity to underwrite risks up to ₹88,000 crores and this will enable ECGC to issue covers that can support additional exports of ₹5.28 trillion over the five years in line with the existing pattern.
The latest updates in Indian and world trade are discussed below:
Cabinet clears listing of Export Credit Guarantee Corporation of India (ECGC), infusion of ₹4,400 crores in five years. (Source)
The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved infusion of capital worth ₹4,400 crores in ECGC Ltd over five years and listing of the public sector undertaking in FY23. The approved infusion along with efforts made to suitably synchronize with the listing process of ECGC through the Initial Public Offering will increase the underwriting capacity of ECGC to support more exports. ECGC has shown continuous surplus and made dividend payments to the Govt. for the last 20 years.
The government will immediately infuse ₹500 crores in ECGC, which provides a credit guarantee to exporters, and another ₹500 crores in FY23.
Sri Lankan economic crisis worries South India’s textile and fabric exporters. (Source)
South India’s textile and fabric exporters are worried that the economic crisis in Sri Lanka–India’s second-largest export destination for clothing products—may lead to a delay in payments from buyers in the island nation. The Sri Lankan rupee has weakened by more than 10% against the US dollar, giving rise to concerns among Indian textile and fabric exporters that payments could get delayed. This comes after a slowdown in exports to Sri Lanka. Sri Lanka’s economic woes are partly due to the outbreak of Covid-19, which affected tourism, one of the primary sources of foreign currency earnings. Its mounting foreign debt crisis is also seen as one of the main underlying reasons for the current situation.
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Govt launches portal to boost export, improving manufacturing base. (Source)
The India Export Initiative and IndiaXports 2021 Portal was launched on September 29 by Union Minister for MSME Narayan Rane. Rane expressed confidence in India driving the export growth with the help of MSMEs and achieving the target of $400 billion by this fiscal and achieving the challenging target of $1 trillion in exports by 2027. IndiaXports aims to orient MSMEs free of cost, to focus on the untapped export potential in existing tariff lines, and support MSMEs to grow the number of exporting MSMEs and increase MSME exports by 50% in 2022
EU says US trade, tech council to boost it’s clout, set rules for 21st century. (Source)
The U.S.-EU Trade and Technology Council (TTC) will give Europe more clout and set standards and rules for the 21st century, the EU’s trade and digital chiefs said, underscoring global concerns about China’s growing power. The Council’s 10 working groups will focus on technology standards, green technology, supply-chain security, data governance, export controls, investment screening, and global trade issues, among others. The EU hopes to hold a second meeting next spring in Belgium.
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