Euro, US economic woes hit trade

EXTERNAL TRADE: Survey advises faster and wider diversification

Merchandise exports could suffer further in the coming months, albeit growing slowly, due to the ongoing euro zone crisis that has also affected some of India’s other important trading partners, according to the Economic Survey for 2011-2012.

India’s share in global merchandise exports reached 1.5 per cent in 2009-10 from 1.3 per cent in 2008-09. It increased to 1.9 per cent in the first half of 2010-11, mainly due to the relatively higher Indian export growth of 55 per cent compared to the 23.1 per cent export growth of the world, said the survey. It said exports were likely to “grow slowly” in the coming months.

 

“If the global situation worsens, the pressure for stimulus measures could again resurface and protectionist measures from trading partners could increase,” it warned.

However, the survey lauded ongoing effort to diversify exports to various new markets, reducing dependence on the traditional markets of the US and Europe. The share of Asia and Asean in total trade increased from 33.3 per cent in 2000-2001 to 57.3 per cent in the first half of 2011-12, while those of Europe and America fell from 42.5 per cent to 30.8 per cent, respectively. This has helped India weather the global crisis emanating from Europe and America, the survey said.

It says India needs to effectively implement its bilateral trade deals with various countries and venture into the new markets more efficiently. “While India has made major strides in its diversification of export markets, a lot needs to be done to not only diversify the basket but also have a perceptible share in the top items of world trade…India’s push towards regional and bilateral agreements should result in meaningful and result-oriented FTAs (Free Trade Agreements)and CECAs (Comprehensive Economic Cooperation Agreements).”

Exports to the top three destinations of the UAE, America and China grew 43.3, 30.8, and 69.1 per cent in 2010-11 and 21.9 per cent, 40.7 per cent and 34.2 per cent in the first half of 2011-12, respectively.