Basmati exports are set to recover in January as Iran, Saudi Arabia, two major destinations, may increase their purchases. This comes after a drop in shipments for three consecutive months since the new crop arrived in October. Besides, the geo-political tension in Ukraine will likely boost shipments.

 

According to trade sources, exporters have signed about 0.25 million tonnes (mt) of contracts for shipments in first three weeks of this month, which is 70 per cent of the volume done in the entire month of January last year.

 

'Ramazan is starting from April 2 and Navruz on March 21. As Saudi Arabia and Iran buy during January-February for these festive demands, there may be good orders. Even if shipments match the year-ago levels in these two months, we will still carry the previous backlog. So, I do not see the target of 4.4 mt being achieved during 2021-22,” said Vijay Setia, former president of All India Rice Exporters Association.

 

Basmati shipments in 2021-22 (April-November) dropped by over 21 per cent to 2.4 mt from year-ago, which has been attributed to base effect of panic buying in 2020 after the Covid pandemic. Despite higher trading activities witnessed during April-November 2020, overall Basmati rice shipments recorded only a marginal four per cent rise at 4.63 mt during the 2020-21 fiscal.

 

Except Iran and Kuwait, Basmati exports to all other major destinations such as Saudi Arab, Iraq, Yemen, UAE, US, UK, Qatar and Oman increased during 2020-21, official data show. 'Iran had curtailed imports in 2020 as it had good domestic crop as well as carry forward stock from the previous year. But its purchase improved in 2021 when there was a decline in other countries,” said an exporter. During April-November 2021-22, basmati exports to Iran increased by three per cent to 0.51 mt from the year-ago period.

 

In December 2021, the registration of exports contracts shows that there was five per cent fall in volume, whereas actual shipments may drop 15-20 per cent as some exporters have been re-negotiating deals with buyers after prices increased, sources said. In November 2021, there was five per cent drop in contracts registration while actual shipments declined 21.4 per cent at 2,38,121 tonnes from the year-ago period.

 

Trade sources also said currently, Basmati prices have increased to $980-990/tonne from $890-900/tonne in October 2021, whereas prices dropped to about $830/tonne in December 2020 from around $970/tonne in October 2020.

 

'Ramazan is starting from April 2 and Navruz on March 21. As Saudi Arabia and Iran buy during January-February for these festive demands, there may be good orders. Even if shipments match the year-ago levels in these two months, we will still carry the previous backlog. So, I do not see the target of 4.4 mt being achieved during 2021-22,” said Vijay Setia, former president of All India Rice Exporters Association.

 

Basmati shipments in 2021-22 (April-November) dropped by over 21 per cent to 2.4 mt from year-ago, which has been attributed to base effect of panic buying in 2020 after the Covid pandemic. Despite higher trading activities witnessed during April-November 2020, overall Basmati rice shipments recorded only a marginal four per cent rise at 4.63 mt during the 2020-21 fiscal.

 

Except Iran and Kuwait, Basmati exports to all other major destinations such as Saudi Arab, Iraq, Yemen, UAE, US, UK, Qatar and Oman increased during 2020-21, official data show. 'Iran had curtailed imports in 2020 as it had good domestic crop as well as carry forward stock from the previous year. But its purchase improved in 2021 when there was a decline in other countries,” said an exporter. During April-November 2021-22, basmati exports to Iran increased by three per cent to 0.51 mt from the year-ago period.

 

In December 2021, the registration of exports contracts shows that there was five per cent fall in volume, whereas actual shipments may drop 15-20 per cent as some exporters have been re-negotiating deals with buyers after prices increased, sources said. In November 2021, there was five per cent drop in contracts registration while actual shipments declined 21.4 per cent at 2,38,121 tonnes from the year-ago period.

 

Trade sources also said currently, Basmati prices have increased to $980-990/tonne from $890-900/tonne in October 2021, whereas prices dropped to about $830/tonne in December 2020 from around $970/tonne in October 2020.

 

'We lost substantial basmati rice market in the European Union. Now, Pakistan and Iran have agreed to take measures to increase the annual trade exchanges to $5 billion by the year 2023 with tariff concession in rice. Further, the development of so-called new Basmati hybrid seed in Pakistan is a serious threat to our authentic appellation. India needs a concrete forward plan to promote genuine and original product in global market,” said foreign trade policy expert S Chandrasekaran..We lost substantial basmati rice market in the European Union. Now, Pakistan and Iran have agreed to take measures to increase the annual trade exchanges to $5 billion by the year 2023 with tariff concession in rice. Further, the development of so-called new Basmati hybrid seed in Pakistan is a serious threat to our authentic appellation. India needs a concrete forward plan to promote genuine and original product in global market,” said foreign trade policy expert S Chandrasekaran..

The conference which is going to focus on exploring ways of developing economic relations between the two countries and solving the existing problems in the way of mutual trade will be held in collaboration with India’s PHD Chamber of Commerce and Industry.

 

As reported, the virtual conference is going to be attended by senior officials from both sides including the Indian ambassador to Tehran and Iranian Ambassador to India, as well as the heads of TCCIMA and PHD Chamber of Commerce.

 

The trade between Iran and India has been following an upward trend over the past two years, despite the U.S. sanctions.

 

According to TCCIMA data, the trade between the two countries increased over 74 percent in the first nine months of the current Iranian calendar year (March 21-December 21, 2021) as compared to the same period in the previous year.

 

Based on the mentioned data, the value of non-oil trade between Iran and India stood at $2.4 billion in the mentioned nine months, of which $1.34 billion was the share of exports and about $1.05 billion was for imports.

 

Considering the increase in exports and the decrease in imports from India during this period, the trade balance between Iran and India in the said nine months has become about $296 million positive in favor of Iran.

 

India stood at sixth place among the Islamic Republic’s top export destinations in the mentioned period, while in terms of imports the country occupied the seventh place among Iran’s top sources of imports.

 

Iran imported about 935,000 tons of commodities from India in the period under review, registering a 47 percent decline year on year.

 

Rice was the top commodity imported from India with $220 million, followed by black tea worth $104.4 million, aluminum oxide worth $101 million, and fresh or dried green bananas worth $647 million.

 

The Islamic Republic exported 4.14 million tons of goods including methanol, ammonia, sponge iron, pistachios, toluene, and urea to India in the said time span.

After achieving enormous progress in their overall relations, the US and India must now set bold goals to take their ties to a new level and achieve the ambitious target of USD 500 billion in bilateral trade, Atul Keshap, the new president of the influential US India Business Council (USIBC) has said.

 

'I think it's vitally important that we show that democracies can deliver; that the United States and India can be a driver of global growth, and a model for prosperity and development in the 21st century,' Keshap told PTI in an interview.

 

Keshap, a veteran American diplomat, has served in various capacities during his illustrious career with the US State Department. These included the US Ambassador to Sri Lanka and the Maldives and Principal Deputy Assistant Secretary of State.

 

Last year he served as the Charge d'affaires of the United States mission to India, during which he helped shape the India US relationship in the first year of the Biden Administration.

 

'I feel it's vitally critically important that we show that open societies powered by free enterprise can be relevant for their people and can help power the world out of this pandemic. I tend to agree entirely with President (Joe) Biden and Prime Minister (Narendra) Modi that the US India Partnership is a force for global good, and it's going to have a huge impact on economic growth on reducing poverty on global security and dealing with all of the challenges of our time,' he said.

 

'So, upon deeper reflection,' the 50-year-old former diplomat noted, he decided that USIBC is the place where he can put the most effort into helping people of the two countries. US Chamber's president Suzanne Clark in her speech last week drove home the point that democracies need to be ambitious, and they need to think boldly.

 

'We need to move forward on the global trade agenda. We need to ensure the prosperity of the future, especially after this pandemic,' he said. During the interview, he referred to the vision of Biden, which he set as the vice president, about potentially having USD 500 billion in trade in goods and services between the United States and India.

 

'That's a very ambitious number and I believe in it. It is a great idea to try to have ambitious targets and to be ambitious. If we in our democracies are not ambitious, then we are only at a standstill. So, we should always be improving,' he said.

 

Keshap said, last year, he was most impressed by the reaction by American business and the USIBC membership, wherein hundreds of companies rushed aid and oxygen supplies and ventilators to India in its moment of need.

 

'We never forgot back in America that when we needed help early in the pandemic, India came to our aid. And when India needed help we did our utmost to bring aid to India,' he said.

 

'That's what friends do. We have to work together. If democracies don't work together, it's going to be a much darker future for all of humanity. This is something I profoundly believe in. I'm optimistic. I'm ambitious. The Chamber is optimistic and ambitious. The member companies of USIBC are fully dedicated to seeing greater growth in trade and economic relations between the United States and India. I want to put my energy, my entrepreneurial spirit, my spirit of service and devotion to this relationship to work,' he asserted.

 

In his new role, Keshap said he wants to help meet that USD500 billion bilateral trade goal.

 

'This is where the government and the private sector have to work together hand in hand. They have to build an argument that people of our free countries can believe in. Ours are democracies. We have to obey the will of the people: 1.7 billion Americans and Indians working together,' he said.

 

'So, we have to articulate the vision and the ambition, and we have to articulate the benefits and we have to convince all of our stakeholders that there is value in lowering trade barriers. There is value in creating strong standards. There's value in creating positive ecosystems. There is value in dealing with small technical issues that might be creating a blockage to greater prosperity between our countries,' Keshap said.

 

When Keshap, first as a US diplomat, started working on India US relationship the bilateral trade was USD20 billion, which increased exponentially to USD147 billion in 2019.

 

'So, we're on the way. That is because of positive, friendly, mutually respectful work between bureaucrats, politicians, technical experts, corporate officials to try to make sure that that number continues to grow,' he said.

 

Keshap articulated that the two countries need to be ambitious now. 'This is a dangerous moment in world affairs,' he said. There are all kinds of stresses and challenges during the pandemic, including economic stress, challenges from other countries and other systems.

 

'I think it is incumbent upon the United States in India to build the strongest possible relationship for our own safety and wellbeing. That is profoundly linked to the economic and commercial and investment relationship. The more we can talk to each other as friends to build a robust Indo Pacific supply chain that weaves us more closely together, the happier I'll be,' Keshap said.

 

The more than a dozen non-stop flights between India and the United States, he said: 'is the symbol of how much growth we've had and how close are countries are getting. What I want to do is put even more energy into seeing that expand. I have a very very ambitious vision of what the US in India can achieve together.'

 

Total bilateral trade between India and the US stood at USD 80.5 billion in 2020-21 as against USD 88.9 billion in 2019-20. India's exports to the US stood at USD 51.62 billion in 2020-21 as against USD 53 billion in 2019-20. India's imports from the US stood at USD 28.9 billion in 2020-21 as against USD 35.9 billion in 2019-20, according to commerce ministry data.

The Northeast Frontier Railway (NFR) continues to run Kisan rail trains to and from Northeast (NE) Regions aiming to help local farmers and producers.

 

An initiative undertaken by Indian Railways, it is believed to boost the income of farmers by moving perishables like fruits and vegetables from production/surplus regions to consumption/deficient regions apart from nearest consumption markets.

 

NF Railway has been running Kisan Rail train from Dhupguri in West Bengal to Agartala in Tripura for transportation of potatoes with stoppages enroute for unloading / loading.

 

Three trips of the train from Dhupguri have already been into operation and three more trips will run on January 24, 27 & 30, 2022. Another service of Kisan Rail train will run from Falakata to Agartala on 24th and 31st January 24 & 31, and February 7, 14, 21 & 28, 2022 for transportation of potatoes.

 

Train No. 00560 Dhupguri – Agartala Kisan Rail will leave Dhupguri at 4.30 PM and will reach Agartala at 1 AM hours on third day. The train will have stoppages at Falakata, New Coochbehar, New Bongaigaon, Guwahati and Bhanga stations for loading/unloading.

 

Another train No. 00561 Falakata – Agartala Kisan Rail will leave Falakata at 3 PM and will reach Agartala at 5 PM on second day. The train will have stoppages at New Coochbehar, New Bongaigaon and Bhanga stations for loading/unloading.

 

It may be mentioned here that perishable items like fruits & vegetables and agro-products can be easily transported through Kisan Rail. 50% subsidy in freight, which is borne by Ministry of Food Processing Industries (MoFPI), is being granted on transportation of fruits and vegetables through Kisan Rail services.

 

Presently the destinations like Agartala, Dimapur, Changsari, New Guwahati, Jorhat Town, Azara, Tinsukia are being covered by “Kisan Rail” in Northeast Frontier Railway.

 

For detailed information regarding Kisan Rail services, one can contact officials of concerned commercial department either at divisional or at Headquarters level.

India has emerged as the largest exporter of gherkins in the world with outbound shipments worth $114 million from April-October 2021 compared to $200 million of exports in full FY21.

 

'India has exported cucumber and gherkins to the tune of 1,23,846 metric tonne,' commerce and industry ministry said in a statement on Sunday.

 

India has crossed the $200 million mark of export of agricultural processed product, - pickling cucumber, which is globally referred as gherkins or cornichons, in the last financial year, it said.

 

In 2020-21, India had shipped 2,23,515 metric tonne of cucumber and gherkins with a value of $223 million.

 

Gherkins are exported under two categories-cucumbers and gherkins, which are prepared and preserved by vinegar or acetic acid and those which are provisionally preserved.

 

Uttar Pradesh’s Varanasi, which is the gateway to Poovanchal region consisting of 17 districts, is fast becoming a buzzing hub for exports of agricultural and processed food products. The setting up of customs clearance and cold room facilities at Lal Bahadur Shastri International Airport aided exports from the religious town, which also has linkages to a robust network of Farmers Producer Organisations (FPOs).

 

More than 20,000 tonne of cereals, fruits and vegetables sourced from the farmers in several districts including Varanasi, Mirzapur, Prayagraj and Gorakhpur have been exported to Nepal, Bangladesh, the United Arab Emirates, Bahrain, Qatar, Saudi Arabia, the United Kingdom and Australia in the last six months.

 

'Currently, on an average, around three tonne of green peas and green chillies are being exported daily to the Persian Gulf countries from Varanasi airport,' said Shaswat Pandey, CEO, Trisagar Farmers Producer Company, an FPO based in Sant Ravidas Nagar district, which has around 350 farmers as members. Besides, fruits and vegetables are being transported via road to Nepal and Bangladesh.

 

Pandey said farmers associated with the FPO grow chillies, green peas, okra, cucumber and other green vegetables which are then exported through the Varanasi airport, where the Agricultural and Processed Food Products Exports Development Authority (APEDA) has set up cold room as well as customs clearances facilities last year. APEDA also facilitated linkages of FPOs with exporters based in Mumbai.

 

'Exports ensure better price realisation and export opportunities. Infrastructure was virtually absent in eastern Uttar Pradesh earlier,' Shardool Vikram, managing director, Jaya Seed Producers Company, based in Varanasi, said. The FPO, which has 267 members, was instrumental in exporting mangoes, fruits and vegetables to UAE, Bahrain and the United Kingdom.

 

To boost exports from region, APEDA organised a series of capacity building programmes for the farmers and FPOs followed by international buyer-seller meets, which provided the platform for exports. 'We are strengthening the export supply chain around Varanasi region which acts as a window to the Poorvanchal region of Uttar Pradesh,' said M Angamuthu, chairman, APEDA.

 

Currently, APEDA in collaboration with Uttar Pradesh Mandi Parishad is setting up a pack house and irradiation centre which is mandatory for mango exports to the United States at Mathura which would further boost exports from Uttar Pradesh.

 

As Varanasi is located on the plains of river Ganges, it has fertile soil which allows production of good quality agri-produce. APEDA, in collaboration with reputed institutions located in the poovanchal, such as Indian Institute of Vegetable Research, International Rice Research Institute and Banaras Hindu University are currently helping farmers in boosting exports.

 

APEDA is currently developing agri-exports infrastructure at Gorakhpur region following establishment of Kushinagar International Airport through collaboration with institutions such as DDU Gorakhpur University and Indian Institute of Seed Science, Mau.

The Minister of Commerce and Industry, Consumer Affairs, Food and Public Distribution, Shri Piyush Goyal has said simplicity of operations and transparency should be the focus of the National Single Window System (NSWS). Chairing a review meeting of the NSWS platform, Shri Goyal said there should be complete end-to-end testing of one set of approvals for each of the integrated Ministries on the NSWS portal.

 

The digital platform of NSWS facilitates investors to identify and apply for approvals. It supports information across 32 Central Ministries/ Departments and the platform has 14 States onboard namely Andhra Pradesh, Assam, Goa, Gujarat, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Odisha, Punjab, Tamil Nadu, Telangana, Uttar Pradesh and Uttarakhand. The process for inclusion of 6 more States is in progress.

 

Shri Goyal said, in order to ensure faster approvals and save time, better communication strategy should be planned. To spread awareness about the platform, he directed that presentations be made before large corporations and to the Indian Missions abroad.

 

The Minister said a Chief Information Security Officer should be nominated to work exclusively for the security and risk monitoring of the NSWS portal. There should be no duplication of efforts and no physical interface, he said. 'If any physical interface and interaction is needed, then it will be done through video conferencing on NSWS; Video Conferencing should be recorded and remain documentary evidence,' said Shri Goyal during the review meeting held on 19th January.

 

The minister stressed on the importance of user feedback. 'It is critical to meet timelines which can be possible through continuous upgradation of the system,' he said.

 

Shri Goyal said that a meeting with States and UTs be organised next month to bring more states onboard the NSWS.

 

The Know Your Approvals (KYA) service is live on the NSWS with 544 approvals across 32 Central Ministries/ Departments. A total of 3,259 approvals are listed. Efforts are under progress to ensure that 13 more Ministries/Departments are onboarded by 31st March 2022 with another 360 approvals/registrations.

 

The first approval through the NSWS portal has been granted on 11 January 2022 to M/s CMR-Kataria Recycling Private Limited for the Vehicle Scrappage Facility RVSF, Kheda, Gujarat with a capacity of 67,000 vehicles. The approval has been made possible within a timeline of 63 days since RVSF application was submitted online on 08 November 2021.

India has set up a target of USD 500 billion exports for the 2022-23 fiscal, a top government official said on Friday, contending that the COVID-19 pandemic has taught the country to 'reimagine' world trade. In December 2021, exports stood at USD 37.8 billion, the highest-ever for any month, Additional DGFT Amiya Chandra said during a webinar organised by the Bengal Chamber of Commerce and Industry.

 

'We are bang on target to touch USD 400 billion for the current fiscal. So far in the first nine months, the country's exports were to the tune of USD 301.38 billion,' he said.

 

Chandra said India is targeting USD 1 trillion exports by 2027.

 

'The apprehension that COVID-19 would lead to a sharp decline in foreign trade has turned out to be negative. However, the pandemic has taught us to reimagine world trade,' he said.

 

The fulcrum of international trade has shifted from Europe and the United States to South East Asia, the Directorate General of Foreign Trade official said.

 

He also said that the world is moving away from multilateral trade agreements to bilateral ones, and India is presently in the process of entering into six FTAs.

 

Chandra said going ahead, artificial intelligence and other forms of technology will become important in matters relating to trade.

 

A separate portal for MSMEs will be launched soon, he added.

 

The Government, with its Digital India Programme initiative, has emphasized that computerization is the fuel for growth and helps the public machinery to efficiently and uniformly spread the outreach of various schemes run by the Government. The Department of F&PD strives to tap the benefits of automation in its various endeavours, especially following the principal that every ounce of foodgrains saved through scientific storage techniques should be considered as grain produced.

 

The Department of Food and Public Distribution under Ministry of Consumer Affairs, Food and Public Distribution with its principal agency, FCI, has developed a roadmap to roll out Online Storage Management (OSM) in the country. The OSM envisages putting in place a single source of information for the food grains stored in the country for central pool through integrating State portals with the central portal.

 

The OSM will develop an ecosystem of storage management applications across the DCP States, each being capable of capturing the Minimum Storage Specifications (MSS).  These MSSs , which have been identified through intense and elaborate discussions with the concerned States and FCI are : capability to compute storage capacity , depict storage point-wise stock position (crop year-wise break up of stocks held , depiction of OB, issues and CB), stack-wise, truck-wise linkage (stack wise details of stock position , truck wise information ), quality parameters (infestation details , treatment details). This would help in route optimization for distribution as well.

 

In a meeting held on 21st Jan’22, under the Chairmanship of Secretary (Food), Govt. of India and attended by Food Secretaries of all DCP States, FCI made a presentation on the progress in the initiative. During the presentation, it was emphasized that the States shall build their respective portals in a collaborative mode, to ensure that the best practices can be imbibed and disseminated among the States.

 

In the meeting, the sixteen (16) States (viz. Andhra Pradesh, Bihar, Chhattisgarh, Gujarat, Haryana, Karnataka, Kerala, Maharashtra, Madhya Pradesh, Odisha, Punjab, Tamil Nadu, Telangana, Tripura, Uttarakhand and West Bengal) have reassured of their commitment to develop/implement storage management applications with MSSs and integrate them with the central portal.

 

This exercise, expected to be completed by Mar’22, will improve efficiency and transparency in stocking, storage, movement and distribution of foodgrains. It will help in driving down costs of food storage and distribution by checking leakages in the entire process. It will also enable the Government with readily available information for both monitoring and fast-paced decision making to benefit the stakeholders, especially PDS consumer whose welfare is the priority of the government.

The Ministry of Commerce and Industry recently released the monthly goods export report of the country. According to the report, in December 2021, India exported 37.29 billion USD of goods, hitting an all-time monthly high.

 

India has hit a monthly export high as the demand for petroleum and engineering products, jewellery, and gems soared the most elevated in December 2021. The country’s merchandise exports almost reached $300 billion in April-December, higher by 48.85% year-on-year and 26% against the same period in 2019, thus achieving three-fourths of its annual export target of USD 400 billion in the first nine months of FY2021-22.

 

On 3 January 2022, Commerce and Industry Minister Piyush Goyal relayed the following to reporters in a media briefing, 'With $300 billion in the first nine months of 2021-22, we are on track to achieve our target'.

 

According to data shown, the top ten main commodity groups, which account for 80% of India’s exports, have reported a 21% growth year on year. Engineering products, which make up 26% of total exports, have increased by 37.27% compared to FY2020-21. The high demand for engineering goods from top importers such as the US, UAE, and Europe bolstered India’s exports.

 

Exports of petroleum products were valued at $5.6 billion in December 2021, a whole 140.2% higher than in December 2022. Exports of clean petroleum products such as gasoil, gasoline, naphtha, and jet fuel rose from 1.26mn in 2020 to 1.33mn b/d in 2021, with an observed increase in shipments to 1.56mn b/d December from 1.36mn b/d in November.

 

Export shipments of dirty petroleum products, including bitumen and fuel oil, rose to 55,000 b/d in 2021 from 47,000 b/d in 2020 while noting an increase from 21,000 b/d in November to 25,000 b/d in December 2021. UAE and Singapore emerged among India’s top petroleum product importers in 2021 with 114,000 b/d and 128,000 b/d, respectively. This growth in the export of petroleum products can be attributed to a sharp rise in the price of crude oil and petroleum goods and a recovery in demand for mobility.

 

Gems and jewellery, which comprise 8% of India’s total exports, rose by 15.8% year on year.

 

The growth mainly represents the market’s recovery from the Covid slump in 2020, with businesses still trying to reach pre-pandemic levels. According to Colin Shah, chairman of the Gem and Jewelry Export Promotion Council of India (GJEPC), the jewellery market has benefitted from the excess liquidity triggered by the fiscal stimulus provided by central banks globally. As such, part of jewellery export growth can be ascribed to the liquidity surplus across the world. However, according to ThePrint, gold jewellery is still experiencing a fall in export due to 'sluggishness' in markets like the Gulf. The US emerged as one of the biggest importers of Indian gems and jewellery in FY2021-22 as well, and its market for Indian diamonds also keeps expanding steadily.

 

India recorded merchandise imports valued at USD 59.27 billion in December 2021, witnessing a rise of 38.06% from the same period in 2020. This growth was mainly led by imports of gold, crude oil, and electronic goods. In 2021, India spent a new high of USD 55.7 billion on gold imports purchasing 1050 tons of gold which is more than double the volume of 430 tons bought in 2020. A price drop, favourable to retail buyers and the bridled demand emerging in 2021 due to weddings postponed until 2021 because of the pandemic, is accountable for the sharp rise in gold imports. According to Nomura, gold imports may have also gained momentum in November-December 2021 due to consumers using the precious metal to hedge against rising inflation.

 

It should be noted that this surge in gold imports put depreciative pressure on the Indian rupee.

 

Like gold imports, crude oil imports grew by 65.17%, valued at USD 15.9 billion in December 2021. This was in sharp contrast to the significant fall in crude imports and the negative oil demand in 2020 due to the pandemic-related lockdowns. In response to the 100% increase in average run rates across all Indian refineries in 2021, refiners started rapid-purchasing crude oil, having forecasted a sustained rise in demand for products as lesser Covid restrictions has boosted demand for transport fuels such as gasoline to pre-pandemic levels, thus explaining the surge in crude imports. Furthermore, $6.5 billion of electronic imports was reported in December 2021, a 29.7% increase compared to the previous year.

 

Preliminary data reported a widened trade gap for India in December 2021 as the growth in imports surpassed the growth in exports. India’s trade deficit rose to USD 21.99 billion in December 2021, a significant rise from the previous year’s trade gap of USD 15.75 billion in December. According to Economic Times India, while the trade deficit in December 2021 showed an improvement in export, imports in upcoming months may continue to rise, increasing India’s current account deficit. Economists from Nomura expect an increase in global commodity prices, rising inflation and stable domestic demand to lead to a rise in imports despite India being on the verge of a third Covid wave. This could result in further widening of India’s trade deficit.

 

While Minister Piyush Goyal revealed that they did not expect any immediate disruption in the supply chain due to the Omicron variant, Engineering and Export Promotion Council of India, Chairman Mahesh Desai argued that they remain cautiously optimistic the Omicron worry is real. It could play a significant spoilsport since India’s major markets in North America and Europe are experiencing a very high number of infections, impacting the order pipeline. While they have not seen any impact yet, a clearer picture will be seen in the upcoming weeks. In addition, boosting trade resilience through regional integration has been a trend in 2021. Still, India finds itself divided between the pressing need to strengthen trade relations in a period of propagating regionalism and act cautiously in hindsight of the consequences of its previous trade agreements.

 

Considering both, India has been negotiating with its trading countries to improve market access. Regarding FTAs free trade, the deal with the UAE has nearly been finalised and an interim agreement with Australia, covering large areas of interest, particularly labour-oriented sectors like textiles, pharma, footwear, leather products and agricultural products. A recent trade agreement was also finalised with Mauritius. Other negotiations are in progress for an India-EU trade agreement, India-GCC trade agreement, and bilateral trade agreements with Thailand and Israel.

 

These negotiations are part of India’s export growth strategy and are expected to improve the country’s trade balance in the upcoming years. However, India’s current trade balance is likely to deteriorate with the trade deficit increasing in terms of billion dollars and as a percentage of nominal GDP as its economy recovers and its trade balance shifts more in favour of imports.