15

 Covid-19 has severely affected the Indian economy. As of September 30, 2020, over six million people in India have been affected by Covid-19. The cumulative number of cases have been steadily on the rise - with over 92,000 deaths recorded till September 25, 2020.  India’s fight with this pandemic amid the struggle for life versus livelihood continues. As the health crisis worldwide transforms itself into a global economic crisis, the pandemic has had numerous impacts on trade. According to the July 2020 press release of the Government of India, India’s overall exports (both merchandise and services) during the April to July 2020-21 period is estimated to be around $141.82 billion, exhibiting a negative growth of around (-) 22% when compared with the same period in 2019-20. Overall imports in the period between April to July 2020-21 is estimated to be at $ 127.76 billion, showing a negative growth of (-) 40.7% when compared over the same period in 2019-20. In case of trade in goods, the trade deficit for July 2020 stood at $ 4.83 billion as against the deficit of $13.43 billion in July 2019, which is a decline of (-) 64.1% approximately. In case of trade in services, the trade balance in services for July 2020 stood at $ 6.99 billion. Taking merchandise and services together, the overall trade surplus for the period of April-July 2020-21 is estimated to be at $14.06 billion as compared to the deficit of $ 33.5 billion in April-July 2019-20. Interestingly, in the last ten years, this is the first time that India is a net exporter. Moving on, India has introduced an online Certificate of Origin (COO) for her trade partners having either PTA or FTA. India has also launched a new platform under the Directorate General of Foreign Trade (DGFT) for issuing certificates of origin and for digital delivery of IEC (i.e. Importer -Exporter Code) related services to facilitate foreign trade through the Central Board of Indirect Taxes and Customs (CBIC) in a “paperless” and “contactless” customs environment as pointed out by Prof. Dr. Prabir De, Coordinator of the ASEAN-India Centre at the Research and Information System for Developing Countries (RIS). Apart from these steps, other notable initiatives by the CBIC include the fulfilment of compliances under the Customs Act being extended up to September 30 2020, prioritised clearance of essentials required in the fight with Covid-19, “paperless” and “contactless” e-bill of entry on a pan India basis introducing machine-based automated release of import consignments, e-gate pass to custom brokers and exporters for releasing consignments among others. To facilitate the smooth supply of essential goods and medical supplies during the lockdown, roadways, railways, airways and cargo movements through the seaports (allowed to continue with regular freight traffic) remained operational along with (24x 7) customs and Direct Port Delivery (DPD) clearances. DG Shipping on March 31, 2020 in an attempt to reduce the financial burden for exporters and importers issued an advisory stating non-charging of demurrage, ground rent beyond the allowed free period or any performance related penalty on non-containerized cargo during the period of the pandemic. India is pitching to become an alternative investment destination for big global businesses in the hope that the pandemic would prompt business houses to shift their manufacturing base from China - like Japan has already done. With 50% Indian exports coming from the MSME units, the government’s stimulus package has several commitments with regards to credit disbursement, equity infusion and tax sops for these MSMEs. The Reserve Bank of India came up with an `15,000 crore liquidity facility for the EXIM Bank and a six-month extension for the importers to complete outward remittances. For exporters, the maximum permissible credit period from banks was extended from 12 months to 15 months for payments made up to July 31, 2020. With India stressing on “Atma Nirbhar” (i.e. going local) as voiced by the Prime Minister - import substitution coupled with export promotion holds the key. One such area is the trade deficit between India and China in the April-June quarter of this fiscal year when it fell to $5.48 billion compared to $13.1 billion in the corresponding period last year. With reference to imports from China, Piyush Goyal, Minister, Department of Commerce and Industry, Government of India said that it dipped to $16.55 billion in Q1 against $21.42 billion in the same period last year. In his written reply to the Parliament with reference to India’s trade position with China, Goyal mentioned how the Indian government has stepped up the level of exports and at the same time, has been cautious in reducing dependence on imports from China. India’s average score on the Export Preparedness Index (EPI) brought out by NITI Aayog is 39 out of 100 (in terms of parameters like business and political environment, access to finance, R&D infrastructure, transport connectivity among others) and is a reflection of the incredible potential which India holds towards transforming herself into an export-based super power. Even in these difficult times, when the world has been struggling with Covid-19, India responded by ramping up production of essential products like PPE kits and hydroxychloroquine and helped out over 100 countries including the likes of the US, France, and Italy among others. Up till now, India has successfully managed the trade challenges emerging from the Covid-19-led global crisis. But challenges remain. India has given the world a glimpse of its desperation for foreign investments while at the same time, expressing fear of foreign acquisition and these contradictory strands are being exposed in an obvious manner. The pool of private capital coming from the US and Europe has dried out under the effects of the pandemic. Across sectors from pharma to telecom and automobiles, industry experts have been vocal against a ‘blanket ban’ on Chinese imports [in the backdrop of political tension] as China accounts for a considerable portion of India’s imports. Only time will tell how such prohibitive controls on imports from China is going to impact India’s trade. At this point of time, countries have to come forward to protect global trade and multilateralism and hence strike a balance between import substitution and export promotion rather than becoming complete protectionists in the name of self-reliance.    -The writer is the Assistant Professor in Economics, Faculty of Commerce and Management, St. Xavier’s University, Kolkata, India.