India’s International Trade : Current Statistics & Future Prospects

With a population of 1.39 billion, India stands as the second-largest country in terms of population only after China and is one of the world’s largest economies. In 2020, India ranked 63rd out of 190 countries in the World Bank’s Ease of Doing Business Index. It ascended 17 notches from its previous rank in 2019. And with that, India’s startup ecosystem is also growing tremendously.

The way I read it, India’s recent success can be largely attributed to its prominence in international trade. India has made new trading partners as well as improved relations with existing ones tremendously. Very recently, India-UAE inked CEPA in a record time of 88 days and India is also in progressing talks with Australia and re-negotiating its partnership with Canada too. Overall, India is trying to enter into FTA’s that will be a win-win deal for the both the nations, as the history suggests that FTAs have not been fruitful for India in the past.

Factual Display of India’s Trade with its Partners

India is an important trading partner for many countries, due to multi-product trading requirements. The image below depicts India’s yearly average trade balance, export destinations and top exported commodities between 2015-2021 with its top 10 trading partners.

The Impact of Covid-19 on India’s International Trade

The World is angry with China, because of the outbreak of Coronavirus. Large importing countries are gradually but surely, looking for alternative production options in Asia, as they want to exit from China. That’s where India has a very strong chance and should grab this opportunity by both hands. Though it is completely understandable that India may not be in the best of its position to deliver the product at the price at which China is capable of today, however the economies of scale will only come with increasing volumes.

Definitely, Indian Exporters are giving tuff competition to China and even today, especially when India has an advantage of lower Freight rates compared to China, the Exporters should bring their cost down considerably for initial few orders, so that the World can also test the quality output which India can produce and even if they have to pay marginally higher compare to what they pay to China in the future, they will be happy to do so.

Finally, War is not good for anyone, but at the same time you can’t stop doing business. The impact of Russia – Ukraine war on India’s international trade will be seen in the near future. The opportunity to export Wheat in the next fiscal year to Africa and other Gulf Markets looks promising to me, even if the transit period is higher. Wheat exports are temporarily banned from India due to supply chain problems but this can change.

India targets 500$ bn of exports in the next fiscal year, and as I understand the new five year foreign trade policy which is due for its announcement later this month, will be drafted keeping in mind this target.

India’s International Trade – Our Final Thoughts

In a nutshell, even though I believe India currently is well placed in the International Trade Architecture, but it is crucial that the Indian Government especially the Commerce Ministry should draft a strong and export friendly five (5) year Foreign Trade Policy (2022-2027) which is due to be announced this month, as today is when the Indian Exporters need that support to flourish in the International Trade.

India, aggressive progress in International Trade – A guest article by Rahul Saigal – International Trade Specialist/Export Consultant