Trade deficit Current Affairs - 2019
Category Wise PDF Compilations available at This Link
India’s export to China is expected to reach an all-time high in the financial year 2018-19.
Increase in Exports
The increase in the exports to China is attributed to US-China trade spat creating new opportunities for exporters and Beijing removing some trade barriers in its effort to check the growing bilateral trade imbalance.
The growth of exports was driven by the following sectors which include marine products, organic chemicals, plastics, petroleum products, grapes and rice.
Bridging the Trade Deficit
Indian exports are expected to reach an all-time high in the current financial year. The exports between April and December stood at $12.7 billion which is closer to last year’s exports of $13.33 billion.
India feels that more efforts are required for greater market penetration in China to bridge the trade deficit. India’s trade deficit with China stood at $63 billion in 2017-18. This $63 billion trade deficit was more than a third of India’s total trade deficit. The exports to China stood at $13.3 billion and imports from China stood at $76.38 billion in 2017-18.
Acknowledging the need to take steps to check the deficit, the following steps have been initiated to bridge the deficit:
- China signed three export protocols with India on rice, fishmeal and tobacco to allow imports of the three items.
- An announcement regarding Chinese import quotas for sugar and rice for 2019 is expected soon which would aid in planning their exports well in time.
- India is also expecting to sign a protocol for export of Indian soyabean meals, cakes and pomegranates to China in the near future.
To make the most of the US-China trade dispute, the Department of Commerce had taken the initiative to identify and share with Indian exporters and other stakeholders, specific lines where the US will lose competitiveness in China and where India had an export potential.
China has agreed to import rice, non-basmati and basmati varieties from 17 registered mills in India. These mills are in Punjab, Haryana, Uttar Pradesh and Madhya Pradesh.
It is considered as a major breakthrough in India’s efforts to ensure market access for Indian products (especially rice) in China as it is the world’s largest rice importer.
What is the issue?
- India had repeatedly sought market access for Indian products citing the country’s widening goods trade deficit with China.
- The products included non-basmati rice, pharmaceuticals and many fruits and vegetables among others.
- However, China had not granted market access to India’s non-basmati rice claiming that it failed to meet Chinese norms on quality, safety and health standards.
- China’s apprehensions included the possibility of the cabinet beetle (or Khapra beetle) pest getting transported along with Indian non-basmati rice consignments to China.
- In India, China’s objection to Indian non-basmati export was seen more political in nature than anything else as it imports non-basmati rice from its all weather friend Pakistan.
Note: India’s goods trade deficit with China has ballooned to $52.7 billion in 2015-16 from $1.1 billion in 2003-04.
- After numerous requests from Indian side, Chinese officials had visited India in September to inspect 19 rice mills registered with National Plant Protection Organization (NPPO).
- NPPO had assisted its Chinese counterpart AQSIQ during inspection for plant quarantine purposes and pest-risk analysis to ensure that non-basmati consignments from India will be pest-free, of good quality and safe.
- The Agricultural and Processed Food Products Export Development Authority (APEDA) under the Indian Commerce Ministry was also involved in the process.
- Besides, India also had earlier sent the information sought by AQSIQ regarding the quality protocol and standard operating procedures.
NPPO is the nodal government agency for inspecting mills and granting certificates on plant health for export purposes. It is mandatory for Indian rice exporters to get registered with NPPO.