The World Trade Organisation (WTO) launched the newest global trade update for 2024. It mentions that merchandise trade volume is up for revival in 2024 after experiencing ~1.2 percent decline in 2023. In value terms the decline was around 5 percent. Macroeconomic conditions in the post-pandemic period and the Ukraine-Russia conflict fuelled inflationary pressure, which also led to reduced real incomes in many developed countries. This had a significant downward impact on demand for imports.

To control the inflationary pressure several Central banks across the world increased interest rates which further eroded income and demand. In terms of markets, the WTO paper indicates a decline in demand in almost all major markets of North America and the EU. Within Asia, large manufacturing and exporting giants such as Japan and South Korea suffered due to lack of export demand. China on the other hand could not revive its growth to the pre-pandemic level due to repeated industrial shocks, especially in the real estate sector. It was only the GCC nations which revived some global import demand. The situation was further aggravated by new conflicts in the Middle East such as Red Sea Crisis, which created global logistical issues and further impacted trade.

How did India perform in such difficult times? As we analysed the data for FY 2023-24, we noticed that India’s performance has been satisfactory despite facing these issues.

Engineering exports revived in the last few months and contributed towards making the cumulative export growth positive at 2.13 percent. Revival in exports was seen in many key regions including North America, EU, and Northeast Asia. Our new FTAs with UAE and Australia have also been effective in boosting exports to the WANA and Oceania regions. This performance is indeed laudable given the difficulties.

The WTO trade update paints a better picture for global trade in 2024. As per their latest data, world merchandise trade volume is projected to grow at 2.6 percent in 2024 and 3.3 percent in 2025. The report further suggests that 2024 will witness abatement in inflation, allowing growth in real income, especially in the advanced economies. This would definitely fuel global merchandise demand. Hence it is expected to bring new opportunities to global exporters including Indians.

To make it possible we urge the government to continue their support for the industry. Some of the issues that are still affecting the competitiveness of our exporters include high raw material prices and poor access to export credit. Our exports in most cases are low to medium value-added, which fetch lower value in the global markets – hence upgradation of the value chain is the need of the hour. Further, in many regions we lack a level playing field compared to our partners in the absence of trade agreements. This is especially true for Latin America, Africa, and even South Asia. Our exporters also face a number of non-tariff barriers in developed countries as our certifying and quality control infrastructure is inadequate. Besides, the scarcity of Indian shipping companies makes our exporters dependent on foreign carriers for exports, paying heavy charges. All these factors need to be addressed if we want to take advantage of the global demand surge and also make our position strong in global markets.

Finally export promotion initiatives are very important in promoting brand India engineering products abroad. EEPC India has been organising a number of events both domestic and abroad for this purpose. Some of the major upcoming events include FEIMEC in Brazil for machine tools, CWIEME in Germany for electrical machinery, Agritechnica Thailand for agricultural machinery. I invite all of you to participate in your relevant events to increase your reach among the customers. 

As global trade eagerly anticipates a revival in the coming months, India’s engineering industry also hopes to increase its momentum in exports. I conclude hereby on this optimistic note.

Arun Kumar Garodia