The COVID-19 outbreak may have currently crippled the global economy but could open up opportunities for countries such as India to corner a higher share in world trade once the dust settles.
The massive disruptions in economic activity since the onset of the virus have highlighted the perils of overdependence on one country for business. A case in point is China.
As pointed out by Soumya Kanti Ghosh, Group Chief Economic Adviser of the State Bank of India in a report, although 2020 is a lost year in terms of trade, India can think long-term and build relations so that it can occupy the space vacated by China.
China exported $2.5 trillion worth of merchandise in 2019, while India exported $0.3 billion. This means China exports 7 times the amount of goods India exports in a year.
Ghosh noted, "India can look in the range of incremental exports growing by $20 billion in the least favourable outcome to a significant $193 billion jump in the 5-year horizon, only if it builds its capabilities and captures share from China."
Vietnam, for example, noted Ghosh, has rapidly captured merchandise exports and it is also touted that a fair number of the factories being rapidly put up in Vietnam are owned and financed by the same Chinese companies being dislodged in their home country.
"However, there is no denying the fact that Vietnam has gained in this trade war, with its cheap labour and cheap currency. How India manoeuvres the geopolitical space will clearly determine how successful it is in becoming an export behemoth," said Ghosh.
India can look in the range of incremental exports growing by $20 billion in the least favourable outcome to a significant $193 billion jump in the 5-year horizon, Ghosh said in the report, adding that this will be possible only if it builds its capabilities and captures share from China.
"We have a very small manufacturing base as compared to China," he said, adding that a significant push, both in terms of strategic relations and structural reforms, will be required from the government's side.
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