Trade Watch Report |ForumIAS

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News: NITI Aayog’s Trade Watch Quarterly Report highlights the challenges being faced by the Indian economy.

Key Highlights of the Report

India achieved limited success in harnessing the China Plus One strategy. While countries like Vietnam, Thailand, Cambodia, and Malaysia have emerged as major beneficiaries
- These countries have simplified tax laws, cheap labour, lower tariffs and showcase proactiveness in signing the Free Trade Agreements (FTA).
India’s share in global trade has fallen for labour intensive sectors, impacting her export competitiveness.
There has been a re-emergence of trade conflict between US and China, reflecting in the trade restrictions imposed by both the countries.
- This has led to the fragmentation of global supply chains, offering opportunities of a potential economic boom for India.
Indian economy is likely to be adversely affected by European Union’s Carbon Border Adjustment Mechanism (CBAM), especially the steel sector, which represents 23.5% of India’s EU export.
- Indian firms may incur tariffs of 20-25%, affecting their export potential to European Union’s market.

China Plus One Strategy

It is a global business strategy in which companies diversify their supply by adding alternative countries to China as part of their global operations.
The idea is to reduce over-reliance on China for manufacturing and sourcing goods, considering risks such as trade tensions, political instability, or supply chain disruptions.

Cross Border Adjustment Mechanism

Carbon Border Adjustment Mechanism aims to prevent carbon leakages and will be imposed on certain carbon intensive goods such as steel, iron, cement, aluminium, electricity, fertilizers, hydrogen products that are imported into the EU.
It is launched as a part of EU’s ‘Fit for 55’ Package.
It will be implemented in phases, with transitional phase from 2023 to 2025 and definitive regime beginning from 2026.

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