Government identifies 12 focus markets for trade and investment

IBT Edit Bureau | July 10, 2023

The Commerce and Industry ministry has developed a thorough strategy to encourage trade and investment, prioritizing 12 nations, including the US and the UK. IBT presents an overview of India’s current trade and investment profile with these partners, as well as the current trade basket.

TPCI_Trade

Image source: Shutterstock

The Ministry of Commerce & Industry has undertaken a focused plan to promote trade and investment with 12 countries earmarked for priority action. According to a source quoted by the Economic Times, 12 priority nations have been identified as focus partners. These include the US, the UK, Brazil, Canada, UAE, Saudi Arabia, the UK, Germany, Sweden, Japan, South Korea and Russia.

The plan will include roadshows, exhibitions and trade fairs in these countries, along with a gamut of trade and investment promotion engagements. In this article, TPCI’s research team provides a brief outlook of India’s trade profile with these markets.

Trade profile with 12 markets

According to latest data from DGCIS for 2022-23, India’s total exports to these 12 markets were recorded at US$ 175.3 billion in 2021, growing by 6.3% YoY and accounting for around 39% share in India’s total merchandise exports for the year. The top markets are the US (17.4% share); the UAE (7% share) and the UK (2.5% share).

India’s exports to selected 12 markets

Country	2022-2023*	% share in India’s exports	Rank in India’s export markets	% growth	5-year CAGR
US	78,542.74	17.4168	1	3.12	10.41%
U ARAB EMTS	31,608.79	7.0092	2	12.71	2.35%
U K	11,406.28	2.5293	7	9.03	3.31%
SAUDI ARAB	10,727.65	2.3789	8	22.48	14.67%
GERMANY	10,134.55	2.2473	9	2.54	3.13%
BRAZIL	9,919.47	2.1996	11	52.87	26.49%
KOREA RP	6,654.10	1.4755	22	-17.7	8.33%
JAPAN	5,461.34	1.2111	26	-11.58	2.90%
CANADA	4,109.74	0.9113	32	9.19	10.40%
RUSSIA	3,146.95	0.6978	36	-3.31	8.29%
TAIWAN	2,637.47	0.5849	39	-4.32	4.11%
SWEDEN	961.93	0.2133	61	-7.15	4.51%

Source: DGCIS; *Figures in US$ million

The 12 markets are quite diverse in terms of their present share in India’s exports – from the US (#1, 17.4% share) to Sweden (#61, share of 0.21%). Brazil has outperformed the rest in growth terms on a YoY basis, with exports growing at 52.9% YoY and showcasing a 5-year CAGR of 26.5%. It was followed by Saudi Arabia (22.5% YoY, CAGR of 14.7%); UAE (12.71% YoY, 5-year CAGR of 2.35%); Canada (9.2% YoY, 5-year CAGR of 10.4%) and the UK (9% YoY, 5-year CAGR of 3.31).

The US is the 3rd fastest growing export market on a CAGR basis (10.41%), followed by Canada at 10.4% and Republic of Korea at 8.33%. Among these markets, Republic of Korea (-17.7%); Japan (-11.6%); Taiwan (-4.32%) and Russia (-3.31 %) have shown negative YoY growth. Notably among these 12 markets, India only enjoys a trade surplus with the US, the UK, Brazil and Canada.

Product basket

To analyse the product basket across these 12 markets, we took a look at ITC trade Map, and analysed latest available data for 2021.

Top exports to shortlisted 12 markets in 2021

HS Code	Product description	Exports in 2020	Exports in 2021
’71	Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad …	12.4	20.94
’27	Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral …	7.3	16
’84	Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof	8	10.8
’85	Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television …	6.5	9.3
’30	Pharmaceutical products	9.3	9.2
’29	Organic chemicals	6.2	8.4
’87	Vehicles other than railway or tramway rolling stock, and parts and accessories thereof	4.4	5.6
’61	Articles of apparel and clothing accessories, knitted or crocheted	4	5.3
’72	Iron and steel	2.1	4.9
’62	Articles of apparel and clothing accessories, not knitted or crocheted	3.7	4.7

Source: ITC Trade Map; figures in US$ billion

The top five product exports at 2-digit level to these markets include Natural or cultured pearls (HS ’71); Mineral fuels (HS ’27); Nuclear reactors (HS ’84); Electrical Machinery (HS ’85) and Pharmaceutical products (HS ’30). Among the top 10, Iron & Steel witnessed highest YoY growth of 138%, followed by Mineral fuels (119.4%); Natural or cultured pearls (69.2%); Electrical Machinery (43.3%) and Organic Chemicals (35.7%).

F&B exports to these markets were recorded at US$ 12.9 billion in 2021, led by Fish & Crustaceans (HS ’03; US$ 3.8 billion); Cereals (HS 10; US$ 1.8 billion); Coffee, tea, mate & spices (HS ’09; US$ 1.33 billion); Dairy produce (HS ’08; US$ 673.3 million) and Preparations of meat, fish (HS ’16; US$ 661.3 million).

Investments give further insight into the possible reasons for India to envision stronger linkages with these partners. As far as investments go, these economies have made a combined cumulative FDI of US$ 178.92 billion into India between April 2000 and March 2023, accounting for around 28% of total FDI into India during the period. The top investor is the US (US$ 60.2 billion); Japan (US$ 38.7 billion); the UK (US$ 33.9 billion); UAE (US$ 15.6 billion) and Germany (US$ 14.2 billion). Eight of these 12 countries are among the top sources of FDI for India, after which we have Sweden (#22), Russia (#25) and Taiwan (#64). Brazil stands out as a notable exception as it’s ranked at 64 among sources of FDI for India.

On seeing the trade and investment data, it is clear that these are lucrative markets for India, accounting for around 39% of exports and 28% of investments into India. The selection is regionally diverse, encompassing key markets in North America, Latin America, Middle East, Europe and Asia. However, if this is indeed the final selection, it curiously leaves out Africa. It is expected that India will strategise its engagement with each of these partners in line with their respective strategic strengths and possible synergies with its business objectives.