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Business News/ Economy / India eyes new export markets as trade with traditional partners declines
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India eyes new export markets as trade with traditional partners declines

The commerce ministry has decided to target France, Saudi Arabia, and Kenya to push exports of iron ore. For engineering goods, it has identified new markets such as Sao Tome, Macao, Georgia, and Croatia, as well as Nigeria, Switzerland, and Lithuania for agricultural and processed food products.

The goods identified for export to new markets include iron ore, engineering goods, drugs and pharmaceuticals, electronics items, agricultural and processed food products. (Photo: Bloomberg)Premium
The goods identified for export to new markets include iron ore, engineering goods, drugs and pharmaceuticals, electronics items, agricultural and processed food products. (Photo: Bloomberg)

New Delhi: The ministry of commerce is working on a plan to diversify its export destinations, and ship goods such as electronics goods, drugs, engineering goods, and food products to new markets, as trade with India's traditional partners such as the US and Europe declines amid geopolitical realignment prompted by regional conflicts.

The government sees significant export potential in regions such as Saudi Arabia, France, Vietnam, the Netherlands, Mexico, and Ethiopia, two people aware of the development said.

The goods identified for export to absolutely new markets include iron ore, engineering goods, drugs and pharmaceuticals, electronics items, agricultural and processed food products.

This initiative is viewed as the government's strategy to broaden the export range from traditional food commodities to include alcoholic beverages, ready-to-eat foods, confectionery, and value-added products such as banana and jackfruit.

This approach involves market research to identify the most suitable products for each destination, considering factors such as market trends, competition, and regulatory requirements, the people cited above said.

New target markets

The commerce ministry has decided to target France, Saudi Arabia, and Kenya to push the export of iron ore. Currently, iron ore is mainly exported to China, Indonesia, Malaysia, Korea, and the Netherlands, the first of the two persons cited earlier said.

As per commerce ministry data, export of iron ore to Europe fell 78% from $227 million in FY23 to $50 million in FY24. Overall exports of iron ore, however, rose 117% from $1.80 billion in FY23 to $3.91 billion FY24.

For engineering goods, the government has identified new markets such as Sao Tome, Macao, Georgia, Croatia, Guinea-Bissau, Belize, Azerbaijan, Myanmar, Lithuania, Norway, Somalia, the US, and Greece, the first person said.

Read | India’s merchandise exports to grow by 12.3% in June quarter: Exim Bank

Also, the government has identified the Netherlands, South Korea, Belgium, Mexico, Japan and Kuwait as promising markets. As of now, engineering goods are mainly exported to the US, UAE, Saudi Arabia, Germany and Italy.

The exports of engineering goods in Europe remained unchanged in FY24, standing at $27 billion.

Similarly, for drugs and pharmaceuticals, Montenegro, South Sudan, Chad, Comoros, Brunei, Latvia, Ireland, Sweden, Haiti and Ethiopia have been identified as new market destinations and Greece as a promising market. Traditional markets for drugs and pharmaceuticals are the US, the UK, the Netherlands, South Africa and Brazil.

For electronics goods, the government has identified Sao Tome, Montenegro, Cayman Islands, St. Vincent, Mongolia, EL Salvador, Turkmenistan, Honduras, Bahrain, Somalia, Puerto Rico, Vietnam and Sweden as new market destinations, while Russia, Mexico and Turkey are listed in the category of promising markets.

The traditional markets for electronics goods are the US, UAE, the Netherlands, the UK and Italy.

To push the export of agricultural and processed food products, the government has identified specific territories for focused strategy and outreach, and includes Nigeria, Switzerland, Lithuania, Slovenia, Mexico, Sweden, Portugal, Cameroon, Djibouti, Latvia, Egypt, Senegal, Canada, Argentina, and Brazil.

The export of agricultural and processed food products stood at $21.6 billion in the 11 months till February 2024, which is lower than the previous year's exports worth $23 billion for the corresponding period.

Trade deficit

India’s goods trade deficit narrowed by nearly 17% in March compared with the previous month, while exports rose only marginally. However, India’s agricultural export recorded a marginal increase of 2.5% to $33.24 billion in FY24 from $32.43 billion in the previous fiscal

The trade deficit fell to $15.6 billion in March, down from $18.71 billion in February, and $16.02 billion in January, commerce ministry data showed. This is the lowest it's been in 11 months—the last time the deficit was narrower was in April 2023 when it came in at $14.44 billion.

An extensive analysis of the export market in these untapped regions is underway to identify potential products and explore new markets, the second person said.

“After conducting this analysis, we will implement targeted actions, such as organising trade delegations and participating in market events, to effectively promote Indian agricultural products," the second person added.

The commerce ministry is also working on policy-level intervention to strengthen its ties with the processed food industry through Agricultural and Processed Food Products Export Development Authority (Apeda).

Queries emailed to commerce secretary, Apeda chairman and spokesperson of commerce ministry remained unanswered till press time.

“This tactical shift in export strategy will encourage farmers to diversify their crops from conventional crops to cash crops, ultimately increasing the presence of processed food products in global markets. This shift is expected to lead to an increase in farmers' income," said Rakesh Arrawatia, professor of finance and accounting at Institute of Rural Management, Anand (Irma).

It will also help address our export-import imbalances, he said.

Wheat export was banned in May 2022, while trade of broken rice was halted in September 2022 and the ban on non-basmati rice has been in force since 20 July 2023, with limited possibility of its lifting, given that the ruling dispensation has extended the free-ration scheme for 800 million beneficiaries until the end of 2028.

The Centre recently lifted the ban on onion exports, with the condition of a minimum export price of $550 per tonne and a 40% export duty. The prohibition on onion exports was in place for nearly six months.

Also Read | India fails to make substantial export gains in the US and Europe in FY24

 

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Published: 10 May 2024, 05:08 PM IST
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