Union Minister of Commerce & Industry Piyush Goyal. File
| Photo Credit: PTI

Commerce and Industry Minister Piyush Goyal has exuded confidence that during this fiscal, the country’s goods and services export numbers will be at the same level; as it was last year despite slowdown and uncertainties in the global trade.

He also said that the government measures such production-linked incentives schemes and focus on high-quality goods and services would help in containing the country’s trade deficit. So our trade deficit will be significantly lower than last year.

“I am happy to share with you that we close the current year in March at the same level as last year. We have a little bit of an adjustment between goods and services, but collectively we will be at the same level as last year, which will be a very, very significant achievement given that most developing countries and less developed countries are seeing a fall in their international trade,” Mr. Goyal told PTI in an interview.

Cumulatively, the country’s merchandise exports in April-January 2023-24 contracted by 4.89% to $353.92 billion. The estimated value of services exports during the ten-month period stood at $84.45 billion. In 2022-23, India’s goods and services exports stood at $776 billion.

The war between Russia and Ukraine; Israel-Hamas is impacting global supply chains and the Red Sea crisis has led to significant increase in transportation costs and delay as Indian exporters have to send their consignments through the Cape of Good Hope, encircling Africa.

The Minister said that India saw a scorching pace of growth in its international trade in the years between 2021 and 2023.

“We grew by 55% over a period of two years, both in goods and in services’. It went up to $776 billion in only two years. And with growth on both goods and services, we could clearly see that this year is going to be one where we will have to consolidate the gains,” he said.

When asked if the government is thinking of extending some kind of support measures to exports to deal with the crisis, he said the approach of being dependent on the government to resolve all the problems is something that now Indian industry also does not really desire.

“We have been able to change the thinking to bring the confidence in the Indian exporters that we should stand on our own feet. We should not be dependent on the crutches of the government. And I’m glad to share with you that they do not want the crutches of support anymore.”

“What we are doing is of course working through the military and the Navy to see that we can give protection to the ships traversing the Red Sea. We are also continuously in dialogue working with the countries in that region and with our own exporters, and very, very mindful and watchful of the situation,” he said.

When asked about the World Trade Organisation (WTO), the Minister said it is “very” relevant and will continue to increase in its relevance as the world needs a rules-based trading system, which is transparent.

“The understanding that is gradually creeping in that we will not allow ourselves to make the same mistakes that countries made in the rural ground, for example, in agriculture,” he said.

Certain quarters of experts are of the view that the WTO is losing its relevance as the member countries are not able to reach consensus on key issues.

On March 1, the talks at the WTO’s Ministerial conference ended with no decision on key issues such as finding a permanent solution to public food stockpile and on curbing fisheries subsidies, but the members agreed to further extend the moratorium on imposing import duties on e-commerce trade for two more years.

Delegates attend the 13th WTO ministerial conference in Abu Dhabi, United Arab Emirates. File
| Photo Credit: Reuters

The talks at the WTO’s ministerial conference ended with no decision on key issues such as finding a permanent solution to public food stockpile and on curbing fisheries subsidies that lead to over-capacity and over-fishing, sources said. However, the members agreed to further extend the moratorium on imposing import duties on e-commerce trade for two more years, they said.

Despite the four days of hectic parleys getting extended for a day, the 166-member World Trade Organisation (WTO) was not able to reach a common ground for resolving the food security issue, a demand raised prominently by India, and curbing subsidies that leads to overfishing and over capacity.

Also read: WTO MC13 | What’s on the agenda for India?

They added that India successfully pushed the food security issue and the country did not yield any ground on protecting the interest of poor farmers and fishermen and also on other issues and kept its defensive interests in various fields intact.

The Indian team led by Commerce and Industry Minister Piyush Goyal, in cooperation with the G-33 grouping, had pitched hard for a permanent solution to the food security issue as it was crucial for the livelihood of 800 million people across the globe.

The 13th ministerial conference (MC), which was supposed to end on February 29, got extended by a day due to the logjam.

Agriculture has countries divided

The Cairns group, comprising countries like Australia and Brazil, has claimed that public stockholding is market-distorting and that there should be no export restrictions. Food-importing countries like Japan and Singapore are pushing for predictability in farm policies.

On the other hand, the US wants market access for its agri commodities, and the EU wants a cut in subsidies.

New Delhi was pressing for a permanent solution to the issue of public stockholding (PSH) of grains for food security programmes and has asked developed countries engaged in distant water fishing to stop providing any kind of subsidies for 25 years.

“The developed nations have major differences among themselves on issues related to agriculture,” they added.

PSH programme is a policy tool under which the Government procures crops like rice and wheat from farmers at a minimum support price (MSP), stores and distributes foodgrains to the poor.

As part of a permanent solution, India has asked for measures like amendments in the formula to calculate the food subsidy cap. Developing nations including India were asking for updating the external reference prices used to calculate market price support in public stockholding, which are currently based on 1986-88 reference prices.

Other issues

Experts said that there should not be any comparison between the fishermen of rich nations and developing countries. In one of the developed countries, the fisheries subsidies are over $80,000 per fisherman, while in India it is about $38 per fisherman.

India and South Africa also blocked a proposal led by China on investment facilitation stating that the agenda is out of the WTO mandate. India has also blocked a proposal from the European Union on industrial policy.

Positive outcomes

The ministerial conference managed to get at least five outcomes such as new disciplines on domestic regulation for services, formal joining of Comoros and Timor-Leste as members of the WTO, and least developing countries continuing to get the benefits of LDC even three years after graduation.

MC is the highest decision-making body of the 166-member Geneva-based multilateral body. As many as 22 more nations have shown interest in joining the organisation.

The world’s trade Ministers gathered in the U.A.E. on February 26 for a high-level WTO meeting with no clear prospects for breakthroughs, amid geopolitical tensions and disagreements.

The World Trade Organisation’s (WTO’s) 13th ministerial conference (MC13), scheduled to run until February 29 in Abu Dhabi, the capital of the United Arab Emirates, is the first in two years.

The WTO is hoping for progress, particularly on fishing, agriculture and electronic commerce.

But big deals are unlikely as the body’s rules require full consensus among all 164 member states — a tall order in the current climate.

“I don’t have hopes that a very substantive agreement will be announced,” said Marcelo Olarreaga, Professor of Economics at the University of Geneva.

“My impression is that the negotiators are dealing with tactical positions — how to make it look like it is the other [side] who is blocking negotiations,” he told AFP.

Even WTO Director-General Ngozi Okonjo-Iweala has said she expects the meeting to be challenging due to the “economic and political headwinds” — from the war in Ukraine, attacks in the Red Sea, inflation, rising food prices and economic difficulties in Europe and China.

Her team is working around the clock to draft agreements for the talks, she told journalists this month, noting that “negotiating positions are still quite tough”, notably on agriculture.

‘Miracle’

During the WTO’s last ministerial meeting, held at its Geneva headquarters in June 2022, trade ministers nailed down a historic deal banning fisheries subsidies harmful to marine life and agreed to a temporary patent waiver for COVID-19 vaccines.

They also committed themselves to re-establishing a dispute settlement system which Washington had brought to a grinding halt in 2019 after years of blocking the appointment of new judges to the WTO’s appeals court.

“Replicating the success, the miracle, of MC12 in 2022 will be extremely challenging,” European Trade Commissioner Valdis Dombrovskis said this month.

“Negotiations on the big-ticket items” — such as fisheries, agriculture and the e-commerce moratorium — will “remain open until the final phase of the conference”, he added.

“Negotiations on dispute settlement reform and potentially some parts of the outcome document will also be challenging.”

However, the WTO faces pressure to eke out progress on reform in Abu Dhabi ahead of the possible re-election of Donald Trump as U.S. President.

During his four years in office from 2017 to 2021, Mr. Trump threatened to pull the United States out of the trade body and disrupted its ability to settle disputes.

“There will be the U.S. elections in November…so this is the last chance,” a diplomatic source in Geneva told AFP on condition of anonymity.

“Postponing anything until after MC13 is not a good strategy.”

Earlier this month, U.S. Trade Representative Katherine Tai underlined Washington’s “commitment to reforming the WTO and creating a more durable multilateral trading system”.

But Olarreaga of the University of Geneva said the other members of the WTO “cannot expect huge concessions” from the administration of U.S. President Joe Biden in an election year.

‘Fragmentation’

While there is doubt over progress at the WTO on major issues such as agriculture, there is hope for small advances on other fronts, particularly aid for developing countries.

On Feb. 26, two new countries, the Comoros and East Timor, are expected to be accepted as WTO members.

More than 120 countries and regions, including China and the European Union, but not the United States, issued a ministerial declaration early on Feb. 26, marking the finalisation of an agreement aimed at facilitating international investments in development.

They also issued a submission requesting the official integration of the deal into the WTO, but some diplomats fear Opposition from India, which rejects any agreement that does not include all member states.

But amid the difficulty of obtaining full consensus, more and more plurilateral agreements — deals with a narrower number of signatories — are being reached, applying only to the participating countries.

Adding to the challenges for those gathering in the U.A.E., is the ongoing war in Gaza and related attacks by Yemeni rebels on ships in the Red Sea, a campaign that has disrupted global maritime trade.

“The current situation is characterised by geopolitical tensions,” said a European diplomat who spoke to AFP on the condition of anonymity.

“High expectations from developing nations following the financial crisis and the Covid-19 pandemic, as well as economic tensions due to inflation… [add to the] risk of fragmentation of the global economy,” the diplomat said.

India has already imposed anti-dumping duty on several products to tackle cheap imports from various countries, including China. (Representational image only.)
| Photo Credit: The Hindu

India has initiated an anti-dumping probe into imports of certain solar glass from China and Vietnam, following a complaint by domestic players.

The Commerce Ministry’s investigation arm Directorate General of Trade Remedies (DGTR) is probing the alleged dumping of ‘Textured Tempered Coated and Uncoated Glass’ made or from China and Vietnam.

The product is also known by various names such as solar glass or solar photovoltaic glass in the market parlance. An application has been filed by Borosil Renewables Limited on behalf of the domestic industry for the probe and the imposition of appropriate anti-dumping duty on imports.

“On the basis of the duly substantiated application by the domestic industry, and having satisfied itself, on the basis of prima facie evidence submitted by the applicant substantiating the dumping and consequent injury to the domestic industry, the authority hereby initiates an anti-dumping investigation into the alleged dumping,” the notification said.

If it is established that the dumping has caused material injury to domestic players, DGTR would recommend the imposition of anti-dumping duty on the imports. The Finance Ministry takes the final decision to impose duties.

There is sufficient evidence that the product is being dumped in the domestic market of India by the exporters from these two countries.

Anti-dumping probes are conducted by countries to determine whether domestic industries have been hurt because of a surge in cheap imports. As a countermeasure, they impose these duties under the multilateral regime of the Geneva-based World Trade Organisation (WTO).

The duty is aimed at ensuring fair trading practices and creating a level-playing field for domestic producers vis-a-vis foreign producers and exporters. India has already imposed anti-dumping duty on several products to tackle cheap imports from various countries, including China.

Maintaining high import duties on sensitive agricultural commodities like rice and resisting pressure to open up the domestic sector to low tariffs will be crucial for preserving India’s self-sufficiency and ensuring food security for its population, a report said on January 1.

Economic think tank GTRI (Global Trade Research Initiative) in its report said that India needs to cut its reliance on imported vegetable oils to promote better health outcomes and also reduce the import bill.

This will need educating consumers about the health benefits of using locally produced oils like mustard, groundnut, and rice bran in lieu of imported oils.

India is the world’s largest importer of vegetable oils, with imports estimated to double to $20.8 billion in 2023-24 from $10.8 billion in 2017-18.

It added that the U.S. and E.U. currently support agriculture by using the latest technology to maximise output, high tariffs (or import duties) to discourage imports and massive subsidies to push exports.

Developed and agricultural-exporting countries like Australia always push developing countries like India to cut duties and subsidies on agricultural commodities to push their exports.

India has built a high import tariff wall (30-100% on sensitive items) to check subsided imports. India also does not cut tariffs on sensitive items for even its FTA (free trade agreement) partners.

The report said that this has paid India with self-sufficiency in almost all products.

“India needs to continue with its current approach to not open the domestic agriculture sector to low tariff subsidised imports. Upholding high import tariffs on sensitive items and resisting pressure to open up the domestic agriculture sector to low-tariff subsidised imports will be crucial for preserving India’s hard-earned self-sufficiency and ensuring food security for its burgeoning population,” it said.

According to the UN’s Food and Agriculture Organisation, net cereal imports by developing countries will almost triple over the next 30 years while their net meat imports might even increase by a factor of almost five.

While most countries will be dependent on food imports, India is lucky to be self-sufficient in all agriculture and food items except vegetable oils.

India’s agricultural imports are estimated to touch $33 billion in 2023 which will be just 4.9% of total merchandise imports.

“This has become possible due to focus on policies like the green and white revolution, high import tariffs and active negotiations at the WTO (World Trade Organisation) to protect food security concerns for the 1.4 billion people over developed country pressure to open Indian agriculture to subsidised imports,” GTRI co-founder Ajay Srivastava said.

On the sugar sector, the report said that India is the world’s largest sugar exporter after Brazil, but this year, it will import sugar in vast quantities as the sugar imports are estimated to grow steeply by 385.4%, from $252 million in 2022 to $1,223.4 million in 2023.

Imports have increased in 2023 due to a decline in domestic production caused by weak rains.

India dominates the global sugar scene as the largest producer, consumer, and second-largest exporter. Its sugar industry, ranking second in agricultural-based sectors, employs millions.

“Despite this, the industry faces competitiveness challenges, relying heavily on subsidies, free power, and water, leading many times to overproduction and market volatility. Water scarcity compounds issues, threatening industry sustainability,” Mr. Srivastava said.

To thrive, the Indian sugar sector must aim to boost sugarcane yield from 55 to the global average of 70 tonnes per hectare, free from subsidies.

“Production uncertainties force frequent policy changes to keep local prices in control, but dissuading long-term investments and hindering strategic planning for future businesses,” he added.

Vegetable oil, pulses, and fresh and dry fruits account for 72.1% of agriculture imports of India in 2023. Vegetable oil is the largest import constituent, accounting for 51.9% of total agriculture imports of India.

India imports 4 types of oils: Crude Palm Oil (CPO), Soya Bean Crude Oil, Crude Sunflower Seed Oil, and Refined Bleached Deodorized (RBD) Palmolein.

The report said that imports in 2023 are set to decline by 18.6% to $17.1 billion compared to 2022, primarily due to a fall in import prices, not in quantities.

Further, it said that India’s pulses imports are expected to rise by 44% to surpass $2.7 billion in 2023 as compared to 2022.

The major pulses and import values in 2023 are Masoor (lentil) at $1.13 billion, Arhar/Tuar (pigeon peas) at $766 million, Urad (beans of vigna mungo) at $536 million, Rajma (kidney beans) at $120 million, and Kabuli Chana at $76 million.

India is the world’s largest producer and consumer of pulses. It aims to enhance domestic production and cut imports by introducing high-yielding, disease-resistant pulse varieties.

The key challenges include addressing water scarcity and mitigating market volatility issues.

“Major efforts extend to reclaiming fallow land, promoting intercropping, and focusing on rainfed areas. Also, the market and infrastructure support involve ensuring fair prices through Minimum Support Price (MSP), investing in storage and processing, and establishing direct marketing channels,” he said.