Export Import Newsletter 22nd October 2021

Once again postponed from October 2021 to March 2022, the next Foreign Trade Policy (FTP) (following FTP 2015-20) wants to grow India’s annual goods and services exports to over US$1 trillion by FY 2026-27. Key objectives will include ensuring India’s greater integration with the global supply chain and reducing logistics costs. To reach its goals India has launched negotiations with the UAE, aiming to conclude trade talks and sign a mutually beneficial Comprehensive Economic Partnership Agreement (CEPA) by March 2022. Progress is also being made around an India-EU free trade agreement as negotiations resumed after an eight-year halt. Meanwhile, India-UK talks are set to enter a new stage in November, with hopes to reach an Interim Agreement by March 2022.

India is expecting continued high demands in foreign markets for specific industries like seafood, where exports may touch $7 billion, and cotton. We have discussed some of the latest developments in Indian trade below:

Indian seafood export may touch $7 billion in FY22 (Source)

Robust demand in the US and record production of vannamei shrimp in the first half of 2021, coupled with the introduction of pathogen-free black tiger shrimp broodstock, have raised the hopes of the Indian seafood industry in hitting the $7 billion mark in exports in FY22. Seafood exports from the country had declined by about 11 percent in FY21 to $5.96 billion from a year earlier as COVID-19 disrupted shipments. However, the last few months have seen demand in the US, India’s main market, booming and the farmers harvesting a bumper output of the vannamei shrimp that accounts for a major share of the export basket.

Japan, which lifted inspection on black tiger shrimp from India last year, accounts for about 40 percent of export from the country. Apart from the US, China, which is currently dependent on Vietnam for tiger shrimp supply, is also expected to buy more from India.

India’s trade with China set to cross $100 billion in 2021 (Source)

India’s trade with China is set to cross the $100 billion mark for the first time in 2021, with two-way trade after three quarters reaching $90 billion, almost 30% up pre-pandemic trading levels. Figures released on Wednesday by China’s General Administration of Customs (GAC) showed that two-way trade after nine months reached $90.37 billion, up 49.3% year-on-year. India’s imports from China reached $68.4 billion, up 51.7% year-on-year, while India’s exports amounted to $21. 9 billion, up 42.5%.

India’s biggest exports to China annually are iron ore, cotton, and other raw material-based commodities. India imports mechanical and electrical machinery in large quantities from China, while imports of medical supplies have soared in the past two years.

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India to see record cotton consumption & strong exports in 2021-22 (Source)

 

India’s 2021-22 cotton consumption is forecast at a record 25.5 million bales and exports are projected at the second-highest level in 8 years at 5.8 million. This level of total use is forecast to lower ending stocks to 12.4 million bales, down nearly 4 million compared with the record level two years prior, according to the US Department of Agriculture (USDA).

Source: USDA

 

India’s projected record consumption in 2021-22 is driven by the expected strong gross domestic product (GDP) growth as well as rising textile exports. The International Monetary Fund’s October Update projected India’s GDP growth at 9.5 per cent in 2021 and 8.5 per cent in 2022, which is expected to support domestic consumption of cotton textiles and garments.

 

PayPal, IIFT to help MSME exporters tap into cross-border trade opportunity with training, support (Source)

 

Digital Payments company PayPal and the Indian Institute of Foreign Trade (IIFT) signed an MoU to launch the India Digital Trade Facilitation Forum (IDTFF). The forum would help micro, small and medium enterprises leverage cross-border trade opportunities with necessary expert support and guidance. It would facilitate education, training and guidance to MSME exporters around marketing, scaling, and digitising their businesses along with enhancing exports.

The launch comes days after the Commerce Ministry had approved a capital infusion of Rs 4,400 crore into the state-owned ECGC (earlier known as Export Credit Guarantee Corporation of India) over the FY22 to FY26 period among measures to boost exports. The export promotion organization ECGC provides credit insurance covers against non-payment risks by the overseas buyers due to commercial and political reasons.

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