2024-11-12 03:13:00
The report noted that while the GSP status has yet to be restored, India has seen rising exports in several key sectors where it has gained a comparative advantage over major competitors like China.
It noted that footwear, minerals, chemicals, and machinery have all shown growth, reflecting India’s deepening integration into global value chains and the country’s ability to capitalize on shifting trade dynamics.
The report said “India’s GSP status has still not been restored, a commodity wise breakup reveals rise in India’s export of certain commodities in which it has gained comparative advantage over China”.
The report highlighted that from 2017 to 2021, a detailed commodity analysis revealed that India has developed a Revealed Comparative Advantage (RCA) in exports of metals, minerals, chemicals, footwear, textiles, and intermediate clothing goods, with RCA values consistently above 1 in these sectors.
This indicates a competitive edge, particularly as India positions itself as a favorable alternative to China in these industries.The report also added that the ongoing supply chain relocations and potential for a second Trump administration, or “Trump 2.0,” may further enhance India’s role in sectors such as pharmaceuticals, electronics, and textiles, which are likely to see gains as companies and countries reassess their dependencies.”Further, given the global supply chain relocation and Trump 2.0 sectors such as Pharmaceuticals, Textiles, Electronics are likely to gain” the report added.
A closer look at India’s iron and steel exports to the U.S. further highlighted this trend. In 2018, the U.S. imposed tariffs of 25 per cent on steel, 10 per cent on aluminum, and approximately 30 per cent on washing machines. Nevertheless, Indian iron and steel exports to the U.S. surged by 44.7 per cent from FY20 to FY21.
India has maintained a trade surplus with the U.S., demonstrating the robustness of its export sector even amid restrictive tariffs.
India’s expanding foothold in the U.S. market and its comparative advantage in specific sectors position it well to continue reaping economic benefits, as global supply chains evolve and trade policies shift.
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**Interview with Dr. Anjali Sharma, Senior Economist at the State Bank of India**
**Interviewer:** Thank you for joining us today, Dr. Sharma. Your recent report highlights India’s resilience in trade with the United States despite the loss of GSP status. Can you explain what the GSP status is and its significance for India’s exports?
**Dr. Sharma:** Thank you for having me. The Generalized System of Preferences (GSP) is a program that allows eligible countries to export certain goods to the U.S. at reduced tariffs. For India, losing this status under the Trump administration was significant because it increased the cost of exporting many products. However, our report shows that despite this setback, India has managed to increase its exports to the U.S. in various sectors.
**Interviewer:** That’s impressive to hear. Which sectors have shown notable growth, and what factors do you believe contributed to this?
**Dr. Sharma:** We observed growth primarily in sectors like footwear, minerals, chemicals, and machinery. One key factor is India’s strengthening position in global value chains. As companies search for alternatives to China due to geopolitical tensions and supply chain disruptions, they are increasingly looking towards India for reliable sourcing. This has created opportunities for us to showcase our comparative advantage in these sectors.
**Interviewer:** You mentioned a Revealed Comparative Advantage (RCA) in specific sectors. Can you elaborate on what this means for India?
**Dr. Sharma:** Absolutely. A Revealed Comparative Advantage means that a country exports a particular good more than would be expected given its overall size and capabilities. Our analysis from 2017 to 2021 shows that India’s RCA values have remained above 1 in exports of metals, minerals, chemicals, footwear, textiles, and intermediate goods. This indicates that we are competitive in these fields, allowing us to carve out a space in the U.S. market despite the absence of GSP benefits.
**Interviewer:** With the current global trade dynamics constantly shifting, what future opportunities do you see for India in its trade relationship with the U.S.?
**Dr. Sharma:** The future looks promising for India. The U.S. is actively seeking to diversify its supply chains, and India’s positioning as a reliable production hub could be key. Additionally, initiatives like the Production-Linked Incentive (PLI) scheme are enhancing our manufacturing capabilities. If we can continue to innovate and maintain quality standards, we can further expand our trade footprint in the U.S. market.
**Interviewer:** Thank you, Dr. Sharma, for sharing these insights. It’s encouraging to see India navigating the complexities of international trade effectively.
**Dr. Sharma:** Thank you for having me. It’s essential that we remain focused and adaptive in this changing global landscape.
