Weekly News 27 - 31 May 2024
Monday, 27 May 2024 (Financial Express) Brazil, Canada, EU urge India to submit timely notifications on sugar subsidies in WTO
During a meeting of the WTO’s agriculture committee on May 23-24 in Geneva, several member countries, including Brazil, Canada, and the EU, urged India to submit timely notifications on its sugar subsidies. These countries, which are major sugar exporters, argue that India's support measures distort global sugar trade. India, however, maintains that its central and state governments do not procure sugarcane from farmers; all purchases are made by private sugar mills, which is why this information was excluded from its domestic support notifications.
The discussion is particularly significant as India appealed a 2022 WTO ruling that deemed its domestic support for sugar and sugarcane inconsistent with global trade norms. Despite the appeal, the WTO's Appellate Body is currently non-functional. The US and Australia presented a joint counter notification, claiming India’s market price support for sugarcane from 2018-19 to 2021-22 exceeded the limits by 92-101%. India rejected these claims and the methodology used, arguing that the figures in Indian rupees were distorted by inflation.
Tuesday, 28 May 2024 (Financial Express) China pips US to be India’s largest trade partner in FY24
China emerged as India's largest goods trading partner in the last financial year, surpassing the US by a modest $116 million with total trade reaching $118.4 billion, a 4.04% growth. Conversely, trade with the US saw an 8.59% contraction to $118.2 billion. India's exports to the US fell by 1.3% to $77.5 billion, and imports dropped 19.8% to $40.7 billion, leading to a consistent trade surplus with the US. In contrast, India's trade deficit with China grew to over $85 billion, with exports to China increasing by 8.8% to $16.6 billion and imports rising by 3.29% to $101.7 billion. The US economic slowdown impacted India's exports, particularly in gems, jewelry, apparel, and chemicals, though smartphone exports mitigated some losses.
India's focus has shifted towards trade integration with Western countries, which typically results in trade surpluses, unlike trade with Eastern nations that result in growing deficits. Among its top 25 trade partners in 2023-24, India enjoyed trade surpluses with only seven countries, notably the US, the Netherlands ($17.3 billion surplus), and Bangladesh ($9.2 billion surplus). Bangladesh relies heavily on India for cotton yarn, petroleum, and electricity. India's changing approach to Free Trade Agreements (FTAs) now emphasizes deals with Western nations, aiming to finalize agreements with the UK and EU swiftly. Meanwhile, efforts to expand trade agreements in South America, particularly with MERCOSUR and individual countries like Peru and Chile, are ongoing.
Wednesday, 29 May 2024 (mint) India's economic policy trajectory will continue regardless of Modi's win or loss, says Raghuram Rajan
Former RBI Governor Raghuram Rajan predicts continuity in India's economic policy regardless of whether Prime Minister Narendra Modi secures a third term. Rajan emphasizes the likelihood of the new government inheriting and continuing existing positive initiatives. He anticipates the upcoming budget to prioritize ongoing advancements while considering additional reforms. Despite uncertainty surrounding the election outcome, financial markets anticipate potential volatility if Modi's Bharatiya Janata Party fails to maintain its majority, expressing concerns about a shift in economic reforms.
Rajan acknowledges the necessity of infrastructure spending under Modi's administration but emphasizes the need for improved infrastructure quality and equitable distribution of investments beyond major industrial firms. Bloomberg Economics forecasts significant infrastructure expenditure in the coming years, aiming to propel economic growth to 9% by 2030.
Thursday, 30 May 2024 (The Economic Times) India set for wheat imports after six years, to shore up reserves
India is set to resume wheat imports after a six-year hiatus to bolster dwindling reserves and stabilize soaring prices amid consecutive years of poor crops. The government is expected to eliminate the 40% import tax on wheat, facilitating purchases from top exporters like Russia. The move, likely to occur after June, aims to ensure ample supplies in the market, with imports of 3 to 5 million metric tons anticipated to offset the need to deplete state reserves and avert post-festival price spikes. Despite concerns over potential backlash from farmers, the impending end of general elections removes political obstacles to wheat imports.
With wheat stocks hitting a 16-year low of 7.5 million metric tons in April, India aims to maintain reserves above 10 million tons, particularly crucial for its extensive food welfare program. Although procurement targets have fallen short due to tepid demand and logistical challenges, imports are deemed economically viable amid global price hikes. The impending policy shift underscores the delicate balance between domestic agricultural interests and the need to stabilize food supplies in a challenging global market.
Friday, 31 May 2024 (Business Standard) US, UK in focus as pharma firms eye $31 billion exports
India aims to achieve $31 billion in pharmaceutical exports in the fiscal year 2024-25, with the UK and the US identified as primary targets. In FY24, India's pharmaceutical exports totaled $27.9 billion, a 9.6% increase from the previous year. Pharmexcil, the Pharmaceutical Exports Promotion Council, is actively pursuing opportunities in the UK, where demand for affordable generics is rising due to drug shortages in the publicly funded National Health Service (NHS). Additionally, the US market remains vital, with Indian exports growing by 15.6% in FY24, driven by demand for affordable generics, which account for over 90% of prescriptions in the US.
While the focus remains on traditional markets like the UK and US, Indian pharmaceutical companies are also exploring opportunities in Africa and the Commonwealth of Independent States (CIS), particularly Nigeria and Russia. Despite challenges in Nigeria, where exports declined in recent years, overall exports to Africa grew by 8.18% in FY24. Pharmexcil's efforts include delegations to key African countries and plans for further engagements to expand market presence and overcome regulatory hurdles.
