Mr. Arun Kumar Garodia

Chairman

 Recently UNCTAD came up with the global trade update for the first quarter of 2024. The report indicated that contrary to the last year, the beginning of this year has been much more positive. The first quarter witnessed growth in global trade with south-south trade outpacing that of the developed countries. Trade revival has been noted in several key developing countries although the rate of revival has not been equal.

In keeping with the global trade trend, India’s engineering exports also recorded positive growth during the first two months of FY 2024-25. While the increase in monthly terms was around 8 percent, in cumulative terms that is April-May 2024-25, the growth was around 2 percent. The growth was entirely contributed by positive export performance of sectors including industrial machinery, electrical machinery, and automobiles. However, the performance of the metal sector was dismal. This below par performance can be attributed to tough competition from China in terms of inventory and price.

 

The UNCTAD report further points out certain new characteristics of global trade: increase in subsidies and trade restrictive measures. The result is evident in India’s performance in the EU, which has implemented a number of trade restrictive measures including the TRQ on steel exports from India and CBAM. In the first two months of 2024-25, India’s engineering exports to the EU declined by ~18 percent. There was also a significant decline in exports to ASEAN where India is facing stiff competition from China. Despite these, India’s exports to North America in the first two months of 2024-25 revived by around 10 percent. The UNCTAD report points out that there is a possibility for the US to reduce interest rate in 2024. If this happens it would depreciate the value of the dollar and would act as a positive catalyst for the growth of international trade. India would also be benefitted if such a policy is adopted by the USA.

 

Some other factors influencing global trade in 2024, as indicated by the UNCTAD report, included changing supply chains. The global supply chains have transformed and diversified following the pandemic and geopolitical conflicts. This has created opportunities for many developing countries such as India and Brazil to become more integrated in the global supply chains. To take advantage of this, India’s exporting community needs to prepare itself for penetrating new markets. Increased demand for green technology will also dominate 2024. India’s engineering industry must look towards more sustainable ways of operations such that they can gain from these changes. However, it would require proper financial support from the Government of India. In this context, EEPC India has proposed a number of suggestions regarding Budget 2024-25, which may be of immense help to the exporting community.

Finally, globally there has been growing demand for container shipping as reflected by the strong increase in the Shanghai Containerised Freight Rate Index. Indian exporters are also facing a number of issues regarding shipping. India does not have any domestic shipping line and is dependent on a handful of foreign operators for exports. This results in high freight charges and other discriminatory practices. The exporting community urges the government to bring in proper monitoring mechanisms which may check the discriminatory practices. Digital customs monitoring systems should be implemented so that dwell and detention time can be tracked. Streamlining of customs procedures with the help of digitisation can help in reducing time related to customs compliances thereby reducing transportation time.

 

EEPC India has remained steadfast in its efforts to help engineering exporters, whether it be export policy or promotion. In the coming months, EEPC India will be participating in Arab Pharma Manufacturer’s Expo 2024 in Amman, Jordan; Eurobike show in Germany; Nigeria Pharma Manufacturing Expo in Lagos, Nigeria; among others. I invite all my fellow members to participate in their relevant expos and get the required visibility in the global market.