Updated December 22nd, 2023 at 11:55 IST
Protectionism measures across world risen from 9,000 a decade ago to 35,000 now: Sahai
Earlier, WTO projected that the growth will be around 3.4 per cent but now they are talking about 3.5 per cent growth. 2024 will be a much better year.
The global growth has slowed posing a formidable challenge in front of Indian exports. In a freewheeling conversation with Republic Business, Ajay Sahai, Director General and CEO, Federation of Indian Export Organisation talked about the growth prospects of export from India, challenges in the way, and the outlook for 2024.
How do you see 2023 in terms of merchandise export in terms of trade between the countries?
If you look into 2023, initially the WTO forecasted that the global trade will grow by around 1.7 per cent. But then in October, they reduced it by 50 per cent and projected it to be 0.8 per cent. That means they factored the increasing global uncertainty, earlier, they factored in the Russian-Ukraine war, but in the meantime, we have the war like situation between Israel and Hamas, then there is increasing global uncertainty emanating from high inflation and increasing interest rates, which has affected the demand.
If I am looking into the calendar year, my exports have not taken much hit, because, in the initial first three months, we have performed very well. But then, in September, we saw a little decline in exports in October, we were positive again, in November.
Looking globally, we can safely conclude that we have performed well. If I'm looking into the entire global situation and the performance of all competing countries, they have not performed well. So, from that perspective, we have done well. Secondly, we have to also factor that when we are looking at the value of exports, the commodity prices are still high, they are not at the much elevated level as in 2022. The advantage of the price was not there in 2023, to some extent that has also pulled down exports in value terms.
How bullish are you as far as 2024 is concerned?
We are of the view that the global economy has passed the war phase. The only challenge which we are still factoring is about the Hamas-Israel war, if it escalates and other countries also join in then it probably may put a question mark on 2024. But that is an unlikely situation, global inflation is also coming down. The central banks of most of the countries have maintained the status quo in the rates, and they are looking forward to reducing the interest rates also.
So we are quite optimistic for 2024. I am pretty sure that 2024 will be a much better year as compared to 2023. And that is reflected in the increasing assessment of 2024 by the WTO. Earlier, they projected that the growth will be around 3.4 per cent but now they are talking about 3.5 per cent growth. 2024 will be a much better year as compared to 2023.
Experts are saying that protectionism is rising across the world, how do you assess the rising protectionism across the world?
It is true. If you look into the recent report, it shows that the total protectionism measures which were in play were about close to 9,000 a decade before and have risen to around 35,000 now. So, every country is definitely looking inwardly because they feel that they want to have the best of the production facilities in their own country, but I think this is something which will be short-lived.
Countries have to be competitive, so that they can retain the manufacturing. So for a short term, the countries may pursue that, but at the end of the day, unless the manufacturing is competitive, it will not be possible to provide support to the industry on a year-on-year basis to sustain manufacturing. So, ultimately, the global principles, the globalisation principle of the most competitive country, their competitive advantage will be important.
As far as 2024 is concerned, where do you see that opportunities are lying, as far as merchandise exports is concerned?
In fact, if you're looking into India's FTA engagement, we have already signed with Australia and UAE, we will be definitely deepening further. We are in the process of signing one with Oman and the UK very shortly, and probably with GCC.
Secondly, we will be benefited by the realignment of the global value chain where the US is making a conscious effort to bypass China and really engage the team to play a very important role. So I personally feel that our engagement through the global value chain will help us to increase our exports.
Do you think India has benefited from China plus one so far?
I am saying that initially with tariff wars some of the businesses have moved from China to India. Now with this China plus one policy, global companies are definitely coming towards India, a lot of inquiries have been generated, some have materialized and some investment has also flown. So we have not taken much advantage of the US-China war as far as the investments are concerned. But now I think that with this new realignment, where they are looking into resettling the entire supply chain, India will definitely benefit.
How do you see rising imports of various commodities in India?
In fact, probably the demand of economies is such that and domestic capability is not keeping pace with it. That is something where I think we have to look for new investment also flowing into the country. And I personally feel that when we are talking about the sector, where imports are increasing, it is not that the domestic companies are not performing well. Probably, we have not seen much investment flowing into these sectors for augmenting the production and with demand going up, the mismatch is there which is being filled through imports.
And so far the steel is concerned, I think the government's quite serious in the matter. They have already convened a meeting with major steel players to look into what is causing this challenge and how we are going to address that.
Anti-dumping duty that was introduced this year, that is not even helping because Steel import from China is going up every month.
The point is that that's one thing if it is an unfair import, anti-dumping duty will definitely help. But if a country is supplying at fair prices even after anti dumping duty because the demands have gone up, the mismatch is there, these kinds of imports will happen. The good thing is that now the government is constantly monitoring imports wherever they see a surge in imports, they are engaging with the industry to find out what is causing the surge and in what way domestic industry can increase the capability so that they can match the surge in imports.
What do you have to say about the import duties that the Indian government is levying just to discourage the import of certain products?
I personally feel that we as a country have never used a very close relationship between the FDI and tariffs. Normally countries are increasing tariffs in a sector, where they want FDI to flow in. Now, with the PLI coming in, we are looking into that strategy. And I personally feel that wherever the tariffs are being increased, they are basically an encouragement to the companies to come and invest in India, if they want to sell in India, then use India for the global production base. Over a period of time as these companies get the scalability, definitely the government will look into tweaking the tariff and bringing it down so that consumer is also benefited in the process.
Published December 21st, 2023 at 18:10 IST