India may soon get a full-fledged opportunity to increase its exports and narrow its trade deficit. Machinery, chemical and textile sectors are likely to get surplus demand from the global market.
India may soon get a full-fledged opportunity to increase its exports and narrow its trade deficit. Machinery, chemical and textile sectors are likely to get surplus demand from the global market. Competitive advantage for manufacturing and production of certain products can give an edge to explore the opportunities generated by the ongoing trade standoff between the US and China, said Piyush Goyal, Minister of Commerce & Industry in Rajya Sabha. Products related to mineral, machinery, mechanical appliances and their parts, electrical machinery and equipment, chemicals, synthetic fibres, and textiles have a window of opportunity, he added.
Though, the minister underlined that the escalation in global trade tensions is a recent factor and India has been attracting better investments in manufacturing over the past four years, foreign direct investments (FDI) from China in metallurgical industries, service sector, renewable energy, electronics, and machine tools have significantly shot up in the previous financial year. FDI from China in Indian metallurgical industries rose around five times year-on-year to USD 16.75 million in FY19 and in the renewable energy and services sector, the same rose three times year-on-year to around USD 25.5 million each.
Similarly, FDI from the US in Indian software and hardware industry rose more than three times year-on-year to USD 1.5 billion in FY19. Metallurgical industries, education and power sectors also saw a spike in FDI from the US. However, India’s major export commodity, steel has seen a sharp decline of 35 per cent year-on-year in exports to the US due to the imposition of the additional tariff of 25 per cent on steel imports by the US.
“The government has sensitised all the trade promotion bodies to work towards enhancing exports by capitalising on this opportunity arising from the ongoing tariff standoff between the US and China,” said Piyush Goyal in the parliament. However, market access, cost competitiveness of the product in comparison to the alternative in different markets and generation of adequate surplus in exports will be a few factors on which the extent of the increase in exports to narrow the deficit gap will depend, he further added.