India is looking for greater access to the Chinese market as it seeks to arrest the fall in farm commodity exports.
India’s container trade in the third quarter of 2019 is seen flat as compared to global growth of 1.5%, according to a trade report released by Maersk, the world’s largest container shipping company.
The Maersk report for import and export for July-September 2019 for India says that while imports into the country witnessed a subdued growth, the overall fiscal impact was nullified by an identical contraction in exports.
The slowdown is aligned closely with the weaker domestic demand, as well as a reflection of the broad-based cyclical weakening of the economic environment in all the main global economies. The economic uncertainty, tight liquidity, decline in global export orders and evolving domestic political scenario also affected the flow of investments and added to currency volatility.
The trade report from data, which is a combination of market intelligence and Maersk volumes, says that globally the negative effects from escalating trade restrictions also weighed on trade growth in the quarter. The trade restrictions have reduced bilateral trade between the US and China, and led to shifts in trade structures, with global importers having shifted sourcing from China to other countries such as Vietnam, Taiwan, Bangladesh and Korea, with Thailand, Mexico and India also showing early signs of being next in line to benefit.
China is among the top five import countries for India, however, imports have declined. India is looking for greater access to the Chinese market as it seeks to arrest the fall in farm commodity exports.
Steve Felder, managing director, Maersk South Asia, said “The current slowdown witnessed in the last two quarters can be accredited to tight liquidity and working capital, weaker domestic consumption patterns and slower global growth. As the global economy continues to face challenges, and trade tensions between major economies ensue, many leading global importers have begun exploring trade alternatives to China. US has emerged as a strong trade partner with India showing growth in exports as well as imports.”
Paper and metal scrap continue to be top traded commodities. India serves as one of the growing countries for the US and EU recyclers looking for export markets, specifically for non-ferrous and paper scrap.
China’s domestic protein production is down by 5% in 2019, influencing the demand for imports, making it one of the primary reasons why India has seen export growth to China as far as seafood and other refrigerated (Reefer) products are concerned.
The report also mentions that apparel exports from India are exposed to multiple threats like US-China trade tension, Brexit uncertainty and almost flat growth in major EU economies which could slow down the pace and make it challenging for apparel exporters.