Although 2020 may be a lost year in terms of trade, India can think long-term and build relations in order to occupy the space vacated by China.
Vietnam can be an inspiration for India to supersede China
When we take a look at the worth of merchandise exports, for 2019, China exported $2.5 trillion worth of products, while India exported $0.3 billion worth of merchandise. This implies that China exports 7 times the quantity of products India exports for a year. Taking a glance at Vietnam, which has rapidly captured merchandise exports, it’s also touted that a good number of the factories being rapidly put up in Vietnam are owned and financed by the identical Chinese companies being dislodged in their home country. However, there’s no denying the actual fact that Vietnam has gained during this trade war because of its cheap labor and cheap currency.
India needs to play its cards now
“How India manoeuvres the geopolitical space will clearly determine how successful it’s in becoming an export behemoth. With just 1.7 per cent in the world’s merchandise exports, India features a long road ahead to catch up with China. But it must be now…,” said the SBI Ecowrap report. As per the report, India is one country which will fulfil global demands with its sizeable population. However, India will need to take a tough examine of its labour reforms and currency outlook to realise market share.
Although COVID-19 can dampen demand for the approaching years, it does provide a chance for global trade rebalancing, and India has to play its cards right to achieve something out of this catastrophe. However, the larger opportunity right away is within the commodity sector, during which India has an RCA greater than China,” said the report.
MSMEs waiting for the green signal
The government has to provide a clean sweep to MSMEs to build the export of trade goods to acquire the advantages of its comparative advantage over products made in China within the post-pandemic world. Although we do have a comparative advantage in textiles and animal goods, in food products we are not competitive. The Government can provide a direct push to the current sector so MSME firms involved in food products manufacturing get benefitted,” the SBI Ecowrap report demonstrated further.