Editorial / 18 Jun 2023

Can Indian trade defy global trends?

by GAC India Senior Shipping Manager Sankar Narayanan & GAC India Director Miriam Mathews

As turbulence and uncertainty have rocked the global economy, India is holding steady. Various sectors are seeing growth driven by Government infrastructure spending and urban consumption. And this financial year’s budget capital expenditure has increased by 33%, 50% of which is allocated purely for infrastructural developments, giving impetus to heavy industries.

Sankar Miriam authors

Further favourable factors in the agricultural sector, including a forecast for a normal monsoon season, have supported the economy so far.

Positive trends
Studying the positive trends in the trade sector, at GAC India we foresee Indian exports and imports, getting a boost from the following:

  • Effective Free Trade Agreements (FTAs)- There is a distinct shift in India’s FTA Strategy with agreements entered into recently with UAE and Australia, and expected to be signed with UK, Canada, Israel and the GCC Council. This will open new markets for exporters in the country and simultaneously attract Foreign Direct Investment.

  • Production Linked Incentive (PLI) Scheme – Providing fiscal incentives for up to 14 sectors, and more set to join, will help increase production. This will eventually integrate Indian trade with the global value chain, when local high quality goods can be manufactured at an effective cost.

  • The National Logistics Policy – This Government policy is leading the revolution of Indian trade by manufacturing goods faster and more efficiently. The Make in India programme is expected to transform the country from a service-led to a manufacturing economy, boost production and provide employment. Electronics, semi-conductor chips and mobiles phones have been on the forefront – demonstrated by Apple’s decision to set up its manufacturing base here.

  • The Sagarmala Programme – Under this project, the Ministry of Ports, Shipping & Waterways has pushed several reforms and initiatives in the maritime industry. We believe that the right infrastructure is key to support the expected increased trade.

What could go wrong?
The Commerce Ministry announced that India has surpassed the targets of the financial year 2022-2023, by achieving exports worth USD 778 billion and imports of USD 892.18 billion. If we look at exports in the beginning of the new financial year, there is a growth of 2% compared to the same period last year. Nonetheless, the country still faces geopolitical risks, impacts of slowing global trade and the onset of recession in developed countries, all of which may cause uncertainties in the export scenario.

India cannot be completely insulated from the impact of global trends, so must be prepared for changes in market dynamics. Even with coal, LNG and fertilizer imports, the Indian market is naturally sensitive to global prices, causing fluctuations in demand at frequent intervals.

Still going strong
At a macro-economic level, however, indications show that raw material prices are in a correction mode, and global supply chains are improving especially with China re-opening.

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Imports of coal, mineral ore and fertilizer components are expected to increase, with export of finished products complimenting it in good volumes.

The steel sector is also emerging as a star player, with recent projections indicating that the country’s demand for steel is set to surge by 7-9% during the current financial year, buoyed by an expected boost from government projects and end-users.

Further, the removal of the 15% export duty in late 2022 is sure to stimulate export demand. Indian steel must be made globally competitive with a wide market access.

Market intelligence
GAC India makes a point of sharing proactive information on the country’s trade prospects with our Indian and global customers. With a strong statistics and intelligence desk, we can provide the market insight to help our Principals plan for their trade and stay ahead of the game.

The increase in trade prospects has cascading benefits to many players in the Indian maritime industry, including shipping agents like us.

In Haldia, for instance, GAC India handled the highest number of dry bulk and break-bulk cargo at the Haldia Dock Complex for 2022-2023. It is the first time we clinched the top spot after two years as No.2 - a clear indication of the increased support from valued clients.

GAC Ship Agency ID6

In Mangalore, GAC was recognised by New Mangalore Port for handling the most chemical cargo vessels as agents for the same period.

Cruising along
We recognise the importance of the country’s growing cruise activity. The sector saw 35-40% year-on-year growth during the 2018-19 period, with about 200 ships calling Indian ports – only to be hit with a steep drop when Covid-19 brought cruise business around to a virtual halt.

Post pandemic, we are seeing positive traction with most of the leading global cruise lines and operators showing their interests in the country. Driven by the rising demand and disposable incomes, further growth is on the cards as global travellers are ready to come to Indian shores and interest grows among domestic cruisers. This is where Indian hospitality can shine. In one of the most popular destination states, Goa, cruise guests are welcomed with live music, folk dances and the traditional Gulal Tikka on the forehead. Such initiatives by the Government and port and tourism bodies go a long way in making our country a favoured cruise destination, world over.

Image by Hans Tooma from Pixabay

19 foreign cruise vessels are scheduled to make 34 coastal calls in India during the current cruise year, with more anticipated for the next season (2023-24) post-monsoon.

GAC India in Goa has been recognised by the Mormugao Port authorities for having handled the second highest number of foreign cruise port calls at the port. This involved ensuring smooth turnaround of vessels and guests through efficient coordination with all authorities and stakeholders involved.

Given its large population and skillset, India has vast potential. If managed well, with the right policies and actions, there is potential for great growth. Infrastructural development must go hand-in-hand with the increase in trade, and we are seeing positive signs of this in motion.

India has much to catch up with developed nations, and it will take time to see tangible results from actions taken. Nevertheless, initiatives are in place and, if executed well, they should bring impactful changes within a shorter time span.

At GAC India, we continue to monitor trade patterns and industry developments that will help our clients. And despite the disruptions of recent years, our service levels have stayed much above par – something greatly appreciated by Principals who trust us when their ships are at any port in the country. Testament to that is our company being named ‘Ship Agency of the Year’ at the Ship Tek International Maritime Awards held in Cochin, the place where GAC India started 40 years ago!

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