Union Minister of Commerce and Industry Piyush Goyal participated in the G7 Trade Ministers’ meeting at Villa San Giovanni, Reggio Calabria, Italy, where he engaged in several high-level bilateral discussions to strengthen India’s global trade relationships.
During the meeting, Goyal met with Italy’s Deputy Prime Minister and Minister of Foreign Affairs, Antonio Tajani. Both leaders emphasised the need to enhance bilateral trade and investment, focusing on industrial co-production and collaboration in clean technologies.
In discussions with Valdis Dombrovskis, Executive Vice President of the European Commission, Goyal addressed promoting trade and economic cooperation between India and the EU, particularly regarding ongoing Free Trade Agreement (FTA) negotiations.
Further meetings included talks with New Zealand’s Trade Minister Todd McClay, where opportunities to boost trade and investment ties were explored. Goyal also discussed advancing FTA negotiations with Jonathan Reynolds, UK Secretary of State for Business and Trade.
With Dr. Robert Habeck, Germany’s Federal Minister for Economic Affairs and Climate Action, Goyal highlighted the growing Indo-German economic partnership. Their discussions centred on the upcoming Inter-Governmental Consultations and the Asia-Pacific Conference of German Businesses scheduled in Delhi.
Throughout these discussions, Goyal underscored the importance of building resilient supply chains, referencing initiatives such as the G20 Generic Framework for Mapping Global Value Chains and the Trilateral Supply Chain Resilience Initiative. He called for collaboration among trusted partners to reinforce global supply chains in critical sectors, including minerals, semiconductors, pharmaceuticals, and green energy.
Goyal also addressed the challenges posed by COVID-19, geopolitical conflicts, and climate change on global value chains, advocating for robust international partnerships. He introduced the concept of the “3 Fs”—fragmented, fragile, and fraught with uncertainties—to describe the current global economic landscape, urging for greater alignment of investment, trade, environment, and energy policies to strengthen global supply chains.
India Seeks Fair Trade Deals, Insists on Technology Transfer and Rupee Transactions
India, despite its booming economy, acknowledges persistent poverty within its borders. To address this and achieve a more equitable economy, the country seeks advantageous Free Trade Agreements (FTAs) with developed nations.
Key Demands from India:
- Technology Transfer: India insists on acquiring cutting-edge technology, particularly in defence, as a precondition for any FTA.
- Rupee as Legal Tender: FTAs should allow transactions in Indian rupees alongside other currencies, reducing dependence on the US dollar and mitigating the impact of potential sanctions.
Challenges:
- Sharing Sensitive Technology: Developed nations might be reluctant to share critical technology, especially in defence.
- Shifting Global Landscape: Global trade is not based on charity, and sanctions are a reality.
India’s Stance:
India urges to be realistic and demands technology in exchange for market access. Specific examples include demanding combat aircraft engine technology from the UK or fighter and transport aircraft engines from the EU.
The article criticises the import-heavy mentality of some Indians and urges the country to learn from past mistakes of developed nations that outsourced production to China.
Currency Concerns:
The dominance of the US dollar is acknowledged, but its weaponization by the West is a concern. India, facing difficulties due to sanctions on Russia, a key partner, seeks to include rupee transactions in FTAs.
Historical Precedent:
The article cites the historical example of using both the pound and the rupee during British rule as evidence for a workable multi-currency system.
Seeking a Level Playing Field:
The vast population difference between India and potential FTA partners necessitates the inclusion of the rupee as a transactional currency. This would create a fairer trade environment, especially for large trading blocs like the EU.
Breaking the One-Way Street:
The article argues that globalisation has become a one-way street favouring the West, and India seeks to change this dynamic by demanding a more balanced system.
India’s Long-Term Struggle:
The article concludes by highlighting the long-term depreciation of the rupee due to recurring trade deficits. This emphasises the need for India to strengthen its economic position and currency value.
Government to Address Non-Tariff Barriers Faced by Exporters
The government is taking steps to address non-tariff barriers (NTBs) that hinder Indian exports, according to a senior official. These barriers, which can include complex documentation procedures and varying environmental standards, can take years to resolve.
The move comes amid ongoing free-trade agreement (FTA) negotiations with developed economies, where stringent environmental and sustainability measures pose challenges for Indian exporters. During a recent meeting, exporters urged Commerce and Industry Minister Piyush Goyal to develop a strategy to tackle NTBs.
NTBs differ from tariffs and duties, focusing instead on regulations and procedures that can make exporting difficult. Examples include product certifications, inspections, and import restrictions. In some cases, India may need to improve its own systems to meet trade partner requirements, while other situations might call for negotiation with partner countries.
A committee has been formed to analyse these barriers. The committee will assess if trade partner regulations comply with World Trade Organization (WTO) rules and if India has previously raised objections. They will also determine if other countries face similar challenges and explore areas where India can adjust its own systems to address NTBs.
This initiative highlights the government’s commitment to smoothening the export process and boosting India’s trade competitiveness.
Government to Launch Online Portal to Address Non-Tariff Barriers in Trade
The government has announced plans to address 100-200 non-tariff barriers affecting trade by launching an online portal in the coming months. The portal will enable exporters to report these barriers, determine their WTO compliance, and ascertain if they are specific to a company or widespread among exporters. A committee will review the reported issues and strategize interventions accordingly. Ajay Sahai, director general of the Federation of Indian Export Organisations, emphasised the significance of this initiative in raising awareness among exporters and facilitating constructive engagement with trade partners. The portal will also maintain a record of barrier histories and discussions with stakeholders. Domestic industries are urged to make necessary enhancements in line with the committee’s recommendations.
Pink Bollworm Threatens Cotton Crop in Mansa, Fazilka, Abohar
The pink bollworm, a destructive insect pest, has emerged as a threat to cotton crops in Mansa, Fazilka, and Abohar regions. While the infestation is reportedly below the economic threshold level, farmers have begun spraying pesticides extensively as a precautionary measure, following recommendations from the Agriculture Department.
The department identified pink bollworm presence in crops bordering Rajasthan and Haryana. In neighbouring Rajasthan, districts like Sriganganagar, Anupgarh, and Hanumangarh are also grappling with the pest. Some farmers in these areas have resorted to plowing under their cotton plants.
Balkar Singh, a cotton farmer from Mansa’s Khiali Chahianwali village, shared his concerns. “The attack began even before flowering,” he said. “We’ve already completed two rounds of insecticide spraying, raising our costs by ₹2,000 per acre per round. For my nine acres, that’s an additional ₹18,000 expense.” Singh added that farmers are also facing a whitefly attack.
This isn’t the first instance of pink bollworm wreaking havoc. Last year, cotton growers in the Malwa region suffered significant losses after planting cotton immediately following the moong harvest. Moong serves as a natural habitat for the pink bollworm, allowing the pest to survive in the soil and infest subsequent cotton crops. Heavy rainfall further exacerbated the situation, leading to nearly 60% crop damage across the state. Experts believe using fresh seeds instead of saved seeds could be a solution to these recurring attacks.
Gurpreet Singh Sandhu, a cotton farmer from Abohar’s Patti Sadiq village, witnessed his yield plummet from the standard 8-10 quintals per acre to just 2 quintals per acre last year due to the pink bollworm. “This year, the crop is under attack again,” he said. “I’ve begun spraying insecticides as advised by Punjab Agricultural University scientists, but the outlook remains bleak. Thankfully, I reduced my cotton acreage; otherwise, the losses would be much higher.”
These repeated crop failures are prompting farmers in Punjab to abandon cotton cultivation. Against a targeted sowing area of 2 lakh hectares, only 99,720 hectares are currently under cotton cultivation. The Agriculture Department is conducting field trials on 60,000 hectares of this area and providing all the necessary insecticides.
Vardhman Textiles Stock on Potential Upswing, Analysts Eye ₹700 Target
Vardhman Textiles’ stock has been on a tear since May 2023, steadily climbing after finding support at ₹280. Currently near ₹520, analysts see a hurdle at ₹560 that could trigger a short-term pullback.
This correction could bring the price down to ₹470. However, analysts remain optimistic, expecting the stock to resume its upward climb and potentially reach ₹700.
Investors considering a long position can enter now at ₹520 and add to their holdings if the price dips to ₹470. A stop-loss is recommended at ₹400 to mitigate risk.
If the stock breaks above ₹560, investors should raise their stop-loss to ₹520. A further increase to ₹600 is advised if the price reaches ₹630. Finally, profit-taking is suggested at the target of ₹700.
India and South Korea Aim to Finalise Trade Pact Upgrade This Year
India and South Korea are set to hold the 11th round of talks this week in Seoul to review and upgrade their existing Comprehensive Economic Partnership Agreement (CEPA), according to a senior official. This comes after ten rounds of discussions since the review process began in 2016.
Both countries are seeking greater market access for their goods. South Korea is pushing for increased openness in sectors like automobiles, textiles, chemicals, and petrochemicals. India, on the other hand, wants easier access to the Korean market for steel, rice, shrimp, and clothing.
Korean officials are hopeful of finalising the agreement in 2024. Experts believe this push stems from a desire for a more balanced trade relationship, with South Korea seeking concessions similar to those offered in the India-Japan FTA. Indian exporters have also raised concerns about Korean industry practices, citing difficulties in areas like steel exports and apparel standards.
The current CEPA, signed in 2009, aimed to reduce tariffs on a significant portion of goods traded between the two countries. However, the agreement’s effectiveness has been questioned due to exclusions in key Korean export sectors. With this upgrade, both nations hope to strengthen economic cooperation and address lingering issues related to implementation, rules of origin, customs procedures, and data sharing.
