The art of winning trade deals post the pandemic

Context: India can gain global trade share after the pandemic, but only if it acts quickly

After effects of COVID

• Home bias:  Push to produce more domestically and increasing flexibility due to relaxed work from home norms.

• New markets for exports: As importers will look for diversification.

Reforms needed in drivers of exports

• Easing domestic bottlenecks: India’s export is stuck at 1.7% of global trade. Export growth can be achieved through :

• General reforms: improvement in irrigation infrastructure , FDI, import tariff, creating land banks, stable supply of coal, more efficient ports etc.
• Sector specific reforms: In textile sector where there is a need to move towards man-made fibre production from cotton.

• Signaling the world to open trade: India must rethink about its import tariff and should try to join RCEP and reap the benefits in India’s favour.

• Stop blaming currency as a factor in declining exports as it contributes only 20% for slowdown. (Other factors being Domestic bottlenecks: 50% and World growth: 33%).

• Allow India’s IT companies to flourish: Work-from-home will become popular attracting more investment in digital transformation, cyber security and cloud migration around the world.

Way Forward: 

• If India can make the right strategic choices quickly, it could make up for some of the lost momentum in economic growth and job creation.