India's exports have
been continuously contracting since last 16 months. In the month of March 2016,
as well the country's exports have registered a decline of 5.5% over the
previous month. In comparison with the exports of March 2015 as well, they have
contracted by 5.47% to have touch a new bottom of $ 22.71 billion, since
December, 2014. The cumulative value of
exports for the period April-March 2015-16 too has therefore come down to US$
261.13 billion (Rs.1708841.43 crore) as against US$ 310.33 billion(Rs.1896348.40
crore) in April-March 2014-15 registering a negative growth of 15.85 per cent
in Dollar terms and 9.89 per cent in Rupee terms. The non-petroleum exports in
March 2016 are valued at US$ 206.39 billion against US$ 213.86 billion of March
2015, a decline of 3.49 per cent. Non-petroleum exports during April to March
2016 are valued at US$ 231.95 billion as compared to US$ 253.54 billion for the
corresponding period in 2015, a reduction of 8.52 per cent.
The trend of falling
exports is though in tandem with other major world economies. The growth in
exports have fallen for USA by 10.81 percent, European Union by 7.40 percent,
China by 11.37 percent and Japan by 12.85 percent for January 2016 over the
corresponding period previous year as per WTO statistics. So, it is a matter of
serious concern that vis a vis the US, EU, China and Japan the decline in
India's exports is more pronounced. To the contrary the Chinese exports have
rather experienced an 18.7 % growth in March, 2016 vis a vis a decline of 5.5%
in case of India.
Though, imports of India too were lower
during March, 2016 and valued at US $ 27.78 billion, (Rs.1,86,250.88
crore) lower by 21.56 per cent in Dollar terms and 15.82 percent lower in Rupee
terms over the level of imports valued at US$ 35.42 billion (Rs.2,21,251.65
crore) in March, 2015. Cumulative value of imports for the period April-March
2015-16 was US $ 379.60 billion (Rs.24,81,367.22 crore) as against US $ 448
billion (Rs.2737086.58 crore) registering a negative growth of 15.28 per cent
in Dollar terms and 9.34 per cent in Rupee terms over the same period last
year.
Though, the balance
of trade has also declined to a record low of $ 5.1 billion in March, 2016 ,
while the trade gap for March, 2015 was $ 11.4 billion. The trade deficit for
April-March, 2015-16 has been estimated at US$ 118.45 billion which is lower
than the deficit of US$ 137.69 billion during April-March, 2014-15. Services
exports have also been affected the current year. As per RBI’s Press Release
dated 18th April 2016, the trade balance in Services (i.e. net export of
Services) for February, 2016 was estimated at US$ 5140 million. The net export
of services for April- February, 2015-16 was estimated at US$ 64.60 billion
which is lower than net export of services of US$ 69.13 billion during April-
February, 2014-15. (The data for April-February 2015-16 has been derived by
adding April-December 2015-16 with month wise QE data of RBI Press Release
dated 18th April 2016).
So, the Overall
Trade Balance, while taking merchandise and services together, has also come
down in 2015-16. The overall trade deficit for April-March, 2015-16 estimated
at US$ 53.859 billion as compared to US$ 68.55 billion over same period last
year, has fallen by 21.44 percent. Services data pertains to April- February as
latest data available are only up to the as February 2016 per the RBI’s Press
Release dated 18th April 2016. However, the same deficits i.e. the trade and
current account deficits are bound to
turn into a surplus in the Balance of Payments after taking into consideration
the private transfers of $ 69 billion. Thus, NRIs working abroad have jacked up
forex receipts and converted the the
current account deficit into a surplus of $16 billion and also enhanced the
Forex reserve of the country . Yet, something needs to done, to ramp up exports
of the country, if the target of doubling the exports, spelled out in the
foreign trade policy of 2015-20 has to be attained. China has already rebounded
its exports in March, 2016 by 18.7 % on a year-on-year basis, in the March,
2016, while the Chinese imports have declined 1.7% by March, 2016, generating a
trade surplus of 194.6 billion yuan in March, 2016. the export growth in March
had been highest for China in last more than a year. India has to take a call
from China, especially when India is having
the largest trade deficit in its trade with China since last many years.
India needs to take a call on the problem of growing trade deficit
with China
The growing trade
deficit with China is a formidable challenge for India. India has highest trade
deficit of $ 51.9 billion with china, inspite of persistent enemic activities
of China, ever since the war of 1962. China is occupying 38000 sq. km. of
India’s territory which it capture in
Aksai Chin in the 1962 war. Thereafter, China has been regularly committing
border incursions very frequently. Presently it has been causing approximately
450 border incursions per year. Moreover, its seige in the Daulat Beg Oldy
region 3 years back had been most humiliating for India after the 1962
war. Chinese veto against India's
proposal for declaring Maulana Masood Azhar as an internationally dreaded
terrorist has also aimed to humiliate
India , as china has no stake against declaring Maulana Masood Azhar a Laskar-e-Taiba terrorist, who has also
established Jaish-e-Mohammad another terrorist outfit.
it is also an open
fact that one after the other industry sectors in India are getting
destabilized due to dumping of cheap goods by China. India has been experiencing
the problem of de-industrialization into a number of sectors on account of
Chinese dumping. The latest victim is the solar power equipment manufacturing
sector of the country. Today 80% of solar panels and roof top solar systems are
coming from china. This has been causing rapid industrial closers in the
country into this sector. Even US has to impose anti-dumping duties on Chinese
import up to 238% of their cost to keep the US solar power sector surviving
against Chinese dumping. So, India too takes care of a variety of sectors
against the Chinese dumping.
The Commerce and
Industry Minister Nirmala Sitharaman has also said in a written reply to the
Lok Sabha, that "Increasing trade deficit with China can primarily be
attributed to the fact that Chinese exports to India rely strongly on
manufactured items, meeting the demand of fast-expanding sectors like telecom
and power. While India's exports to China are characterized by primary
products, raw materials and intermediate products,"
She has informed the
parliament that India's trade deficit with China stood at USD 51.86 billion,
with a bilateral trade of USD 71.22 billion in 2015. According to her, during
this period India's exports to China came in at USD 9.68 billion while imports
were USD 61.54 billion. moreover, In a separate reply, she has also said that
Indian MSMEs are facing significant competition from Chinese imports.
Especially in respect of 12 major product groups largely manufactured by MSMEs,
imports from China grew at a higher rate than respective imports from all other
countries combined during 2011-2 to 2014-15," she said coming to the issue
of dumping , she has said that so far, there have been 322 anti-dumping cases,
of which 177 cases involve China.
Chinese Smart Phones
taking over the Indian Market: Like most other sectors, the smart phone market
in India has also been experiencing an import surge from china. According to
the consulting firm ‘Country Point Technology Market Research’ the number of
Chinese smart phone brands available in India, has jumped from 12 in the first
quarter of 2013 to 57 in first quarter of 2015 in a span of two years. The
market share of Chinese vendors of smart phones too has grown from 15% in the
last quarter of 2014 to 22% in 2015. Indeed, the share of china-based smart
phone vendors has increased by 7% in a year. While the share of home-grown
smart phone vendors of India has declined by 5% and even the share of global
vendors too has shrank by 1%. All the Chinese brands viz. Huawei, Lenovo, Moto,
Xiaomi, , Gionee, One Plus, Vego, Oppo, Meizu, LeeCo, Cool Pad and so on have
been making rapid strides in the Indian market.
It is also worrisome that, inspite
of having enjoyed a strong position in the
first generation of telecom technology, India has dropped itself out of
race in harnessing the 2G, 3G & 4G technologies and has how become, foreign
dependent in all these categories. Therefore, India needs to develop this
sector indigenously, to avert such a foreign dependence. At the time of advent
of 2G technology, India had achieved a major breakthrough in developing the
coreDECT technology, unique for 2G telecommunication of mobile telephone
wherein both voice & data can travel together under this technology.
Therefore, it is most imperative to develop the handsets industry as well as
this unique home grown technology. Moreover, if India has to take care of its
trade deficit, steps has to take care of its Chinese imports, which need to be
taken to curb to industrial sickness and closures. This sickness and closure of
Industries alone is responsible for the growing non performing assets (NPAs) of
the banking sector.
