India has an ambitious goal of becoming a $5 trillion economy by 2024. And, one of the crucial factors to achieve this goal is export-driven growth of Indian MSMEs looking for opportunities to export. Valued at $262 billion in 2017-18, India's exports are less than that of the small countries like South Korea and Switzerland. This means a lot of scope of development and business growth is present in India's export market, especially in the field of agriculture and manufactured goods. Here are some highlights of key external developments which will influence the Indian export market in the near future and the opportunities for the MSMEs in India.
The ongoing conflict between China and the USA over the International Trade has opened up some gateways for India to explore trade in both countries. China is the world's largest importer of Soybeans and most of its imports come from the USA. However, due to recent conflict, China has halted Soybeans import from the USA. This is an opportunity for Indian farmers to scale up their production of Soybeans and start exporting in the Chinese market which is very lucrative in terms of both demand and prices. Soybean is one case, the tariff war is affecting hundreds of similar goods which could be exported from India to China. Complementary to this, the Chinese government has reduced tariffs on Indian goods as part of the Asia-Pacific Trade Agreement giving Indian exporters a competitive edge over its American competitors.
On the other hand, the USA remains a top destination for India's exports due to higher consumption and profitable prices. However, the trade war has opened up opportunities to export new commodities like consumer durables, aluminum products, steel products, and several manufactured goods that were previously dominated by the Chinese exporters. India also has the potential to offer itself as a more reliable and open trade partner to the USA and raise itself as an alternative to China. The vibrant economic cooperation between the two countries makes the USA a suitable destination for both established and upcoming businesses in India to export any commodity ranging from agriculture to high-tech services.
Similar developments to grow economic cooperation with India has been seen in other regions as well, especially in the Middle-East and Southeast Asia. The Governments of UAE and India have agreed to increase the trade value from $60 billion to $100 billion in the next 5 years. UAE (as a gateway to the whole middle-east region) offers huge opportunities for the Indian MSME's to export multiple varieties of goods like food grains, packed food items, medicines, textiles, etc. Similar agreements have also been made with other countries like Bahrain, Saudi Arabia, Iran, etc to facilitate trade between the countries and explore the untapped opportunities. There is also the presence of more than 5 million people of Indian origin in this region demanding a wide variety of Indian goods.
Moving towards the East, ASEAN (Association of Southeast Asian Nations) countries have become key trade partners of India in recent years. Thailand and Myanmar are now connected via roads and are available to the Indian exporters to explore. Indo-ASEAN Free Trade Agreement makes this region very beneficial for the Indian exports as it is a growing region within the vicinity of India. The region is home to 1.8 billion people and there is a huge demand for agricultural goods, textiles, raw materials, and natural resources.
In a nutshell, the outlook of the export market in India is highly positive and MSMEs in India should take initiatives to explore these opportunities. Ximpex supports these initiatives of Indian MSMEs to venture into the international trade and provides step by step approach to resolve all the challenges faced by an MSME. As said by Adam Smith 'Trade defines the wealth of the nation', which means the economic strength of a country lies in the hands of MSMEs who are a crucial part of this process.
Author: Sachin Yadav Co-Author: Lisa Goel