The Ministry of Finance’s report on the Indian economy for July provided a note of optimism about a recovery. Indeed, the most recent data point upwards. Trade picked up again last month as covid cases declined to a plateau of around 40,000 per day and restrictions were lifted across the country. The biggest beneficiary has been our manufacturing sector. Stores were buzzing again, even as orders surged in the wake of a retail recovery that featured “revenge buying” as a mode of consumer behavior. The rebound was reflected in the purchasing managers index for this sector, which swung sharply into the expansion zone in July, even though the services index remained moderate. India’s indirect tax catching up has been buoyant, with significantly higher GST collections ??$ 1 trillion. With 112.7 million tonnes, the rail freight movement in July was at its highest level on record. Indicators such as auto sales, highway toll charges and electronic bill generation also showed a rebound. As part of this is a rollback to covid-crushed trade, its sustainability could critically hinge on political support.
To this end, what deserves priority at the moment is an export dynamic, for which we must seize all opportunities. India’s recent performance in ports has been impressive. Our overseas cargo shipments peaked at $ 35.2 billion in July, following a record high of $ 95 billion in the quarter ended June 30. If this momentum continues, the government’s goal of $ 400 billion in merchandise exports for 2021-2022 will seem within reach. And if we do, it would mark both a new peak and a return to form after a prolonged slump in exports mainly due to a decline in globalization over the past decade. Whether we are at another inflection point is unclear, but the World Trade Organization expects world merchandise trade to increase 8.0% this calendar year, after falling 5%. 3% in 2020. For exporters, the tax-driven US economy has a particularly robust market. on supply, ready to absorb swelling imports. With household savings expanded through direct cash transfers as part of a liberal fiscal stimulus, a spending boom is underway in the United States that could become even more exuberant once the pandemic is over. This also applies to other rich markets.
Indian exporters must make the most of it. In order for us to maximize our global gains, however, we need a sharper export orientation in terms of policy. Obstacles to our global competitiveness, such as high tariffs on inputs and reverse tariffs on intermediate and ready-to-use products, must be removed in many industrial sectors. With the evolution of online spending driven by covid, we also need to enable e-commerce platforms with extended reach in rich markets to act as an export channel for us. To do this, they need quality control of sourcing and back-end operations, which our rules strive to deny them, even though they face more stringent restrictions on how they operate. and an antitrust investigation into accusations of intimidation of sellers. Amazon’s recent severing of ties with its largest national provider Cloudtail, declared shortly after the Supreme Court refused to obstruct our competition regulator’s investigation, is a direct consequence of this. He also illustrated why activating the Internet trade route can be difficult. The chances of a policy reversal on back-end control seem low. Our trade minister was quoted as welcoming the judiciary’s decision on Amazon and Walmart’s Flipkart on Tuesday with a laden mention of the anniversary of the Quit India appeal. But for the sake of our economy, let’s rethink e-com in a global context.
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