The role of international trade in the growth of the economy has been well established. The major exporting nations namely, Germany, Japan, South Korea and later on China and the driving forces contributed by growing merchandise trade in these countries reflected in growth of manufacturing and services both in volume and growth, rise in per capita income, rise in employment and also in skill development.
The role of international trade in the growth of the economy has been well established. The major exporting nations namely, Germany, Japan, South Korea and later on China and the driving forces contributed by growing merchandise trade in these countries reflected in growth of manufacturing and services both in volume and growth, rise in per capita income, rise in employment and also in skill development. It firmly establishes a strong positive linkage between export exposure and overall growth of the economy. The latest release of Global merchandise trade statistics by WTO clearly defines the changing pattern of world imports.
It is interesting to note that world merchandise trade which grew by 2.7% in 2014 came down to 2.4% in 2015 and subsequently to 1.3% in 2016. This has impacted global GDP growth to drop down from 2.7% in 2014 to 2.3% in 2016. The world merchandise exports grew from $157 bn to $15,464 bn in the last five decades. However, India’s share in world merchandise exports has grown marginally from 1.0% to 1.7% during the period. In comparison the world merchandise imports grew from $164 bn to $15,799 bn in the last five decades. India’s share in world merchandise imports has grown from 1.5% to 2.3% during the period. India continues to have deficit in external trade. India ranks 20th in the list of exporters and ranks 14th in the list of importers of merchandise trade. In commercial services exports and imports, India has maintained 8th ranking in 2016.
With regard to Iron and steel, total export and import values reached around $ 342 bn and $271 bn respectively in 2016. It may be noted that India’s share in total steel exports in the world market has gone up from 1.1% in 2000 to 2.8% in 2016. During this period China’s share in total steel exports has risen from 3.7% in 2000 to as high as 19.2% in 2016. Japan’s share in total steel exports in 2000 which was 12.2% has since come down to 9.1% in 2016. Our steel export share in last year is lower than that of South Korea, Russia, USA, Brazil, Ukraine and Chinese Taipei. India’s share in total steel imports has moved up from 0.7% in 2000 to 3.2% in 2016.
Correspondingly, US share in total steel imports which was 17.0% in 2000 has since come down to 12.1% last year. South Korea, Vietnam, Thailand, Mexico and Turkey have imported more steel than India in 2016 other than USA and China. The approximate values of steel exports from India have reached around $9.4 bn in 2016 and value of steel imports reached around $11.7 bn in the same year. Expectedly, India has performed well in exports of automotive products and exports of computer services. In the former, India has exported $13.8 bn worth of automotive products. In the latter, India exported $ 52.7 bn worth of computer services in 2016 thereby occupying 17.8% share in the global exports of this category.
The report has also commented on the recent surge in trade protecting measures and the decline in merchandise trade is slated to be an offshoot of these measures. The restrictions on low priced imports of steel and spate of trade restrictive measures like anti dumping, minimum import price and safeguard duties have helped domestic steel prices to move up since later half on 2016 and steel producers in almost all countries have been benefited by this development. This new age of protectionism has an additional benefit. It has made steel export thrusts as one of the major areas of focus for the next few years.
While steel export thrusts is quite in sync with the current scenario and India’s recent experience of being a net steel exporter is fully aligned with its efforts of augmentation of steel capacities, the spate of protectionism in the major consumption markets in US, EU and South East Asian countries would pose a stiff challenge to Indian steel exporters. Two factors appear to be favourable for steel exports. Chinese exports of HR Coils SS400 has recently crossed $500 per tonne FOB price and US steel imports in H1 of 2017 at 19.6 MT happens to be 25% more as compared to the level in the previous year.