In the past week, I had the opportunity to be a part of a business delegation to Greece. This delegation was planned on the sidelines of Prime Minister Narendra Modi’s historic Greece visit, the first by an Indian Head of Government in 40 years. As a part of the European Union, Greece holds significance for India in terms of bilateral economic relations. We are already aware of the various sustainable but protective steps adopted by the EU in recent times, an example being the Carbon Border Management Tax (CBAM). Additionally the Indian business diaspora is affected by the withdrawal of the EU GSP and the imposition of Tariff Rate Quota (TRQ) on Indian exports. At the same time, we are anticipating some positive results from the ongoing India-EU FTA negotiations. In this background, the talks with Greece held special importance for India. I am indeed happy to be part of the Indian business delegation and such steps are essential to make bilateral cooperation stronger.
The Prime Minister’s visit to Greece happened on the sidelines of the 15th edition of the BRICS summit, which was held in South Africa between 22 and 24 August 2023. This summit was particularly significant as it is the first physical meeting between the leadership of the BRICS nations since the COVID pandemic and the Ukraine-Russia crisis – hence the summit happened at a time when the world is going through several geopolitical and geo-economic changes. Furthermore the summit in a way is seen as a call to unity of the developing world as it invites leaders from 55 members of the African Union and also leaders from Asia and Latin American countries which are representative of the Global South. The discussion topics in the summit ranged from intra-group trade in local currencies, expansion of group membership, and trade and investment cooperation within the group.
The BRICS in its present form can be seen as a group of the most dynamic and emerging markets of the world. With further additions in group membership the nature of the group will become more dynamic. Greater cooperation within the group and steps such as intra-group trade in local currencies can help the Indian engineering sector diversify their exporting destinations from the current developed world to the emerging markets, especially those of Africa and Latin America. While certain differences exist among the leadership, if these are addressed and greater cooperation is built within the group, this could truly unleash the potential of the emerging markets.
Meanwhile it is important to look into India’s engineering trade pattern in the recent times. India’s engineering exports continued to decline for the fourth month in fiscal 2023-24 as it dropped by 6.62 percent to $8.75 billion in July 2023 from $9.37 billion in July 2022. The decline was mainly due to drop in exports of iron and steel and aluminium coupled with falling global demand due to recession-like situation in major developed regions. Exports also dropped in India’s major destinations including North America, EU, ASEAN and the South Asian region. The decline in the metal sector has been a result of weakening global demand. Latest news has indicated that global demand for steel weakened further with slower offtake from China’s construction sector. At the same time excess supply from China has kept strict check on steel prices.
The global trade trends have also showed signs of weakness. For the second quarter of 2023, the UNCTAD nowcast suggests a slowdown in global trade growth, pointing to recently downgraded world economic forecasts and factors such as persistent inflation, financial vulnerabilities, the war in Ukraine, and geopolitical tensions. According to the report, the outlook for global trade in the second half of 2023 is pessimistic, as negative factors dominate the positive. To thrive in this difficult situation, trade diversification becomes important for India. Diversification helps distribute the risk associated with economic uncertainties and reduces reliance on a few markets. India needs to focus more on emerging markets like Africa and Latin America and the BRICS summit could offer important opportunities for this.
Finally, on behalf of the engineering sector, EEPC India has been organising and participating in a number of events across the world. Some of the prominent forthcoming events in September include Bangla MedExpo 2023 in Dhaka, Bangladesh, and EMO Hannover in Germany. I invite you to voluntarily participate in these events as these are key to popularising Brand India Engineering across the world.