Voice of America (VOA) reported that in response to the US’s decision to raise tariffs on imports from China, Chinese officials have strongly vowed to retaliate, emphasizing that this action will significantly impact bilateral cooperation with the US. The White House stated on Tuesday that President Joe Biden has instructed his Trade Representative to elevate tariffs on $18 billion worth of imports from China, encompassing semiconductors, solar cells, batteries, and crucial minerals, with the aim of safeguarding American workers and businesses.

China’s Ministry of Commerce, in a reply to the US’s move, stated, “This will seriously affect the atmosphere of bilateral cooperation. The United States should immediately correct its wrongdoing and cancel the additional tariffs imposed on China. China will take resolute measures to defend its rights and interests.”

The White House announcement on Tuesday came at the conclusion of a statutory review of tariffs, which occurs every four years.

It further stated that the decision has come in response to China’s ‘unfair trade practices’ and to counteract the resulting harms. “China’s unfair trade practices concerning technology transfer, intellectual property, and innovation are threatening American businesses and workers. China is also flooding global markets with artificially low-priced exports. In response to China’s unfair trade practices and to counteract the resulting harms, today, President Biden is directing his Trade Representative to increase tariffs under Section 301 of the Trade Act of 1974 on USD 18 billion of imports from China to protect American workers and businesses,” the White House statement read.

The statement on hiked tariffs on imports from China also noted that the Chinese government has used unfair and non-market practices for too long now. Moreover, US President Biden accused the Chinese government of “cheating” when it competes with other nations in international trade. “For years, the Chinese government has poured state money into Chinese companies across a whole range of industries: steel and aluminium, semiconductors, electric vehicles, solar panels – the industries of the future–and even critical health equipment, like gloves and masks,” he said. “China heavily subsidised all these products, pushing Chinese companies to produce far more than the rest of the world can absorb,” Biden said. “And then dumping the excess products onto the market at unfairly low prices, driving other manufacturers around the world out of business.”

Additionally, Biden said that the existing tariffs, many of which were put in place during the administration of former President Donald Trump, would remain in place and that the additional tariffs would target specific products and industries.

Moreover, along with the 100 per cent tariff on electric vehicles, the administration is also planning new levies on electric vehicle batteries, certain kinds of semiconductors, solar cells, and equipment used in the health care industry, including face masks, medical gloves, syringes and needles.

Merchandise exports charted a very mild growth amidst global challenges with electronic goods, drugs & pharmaceuticals, organic & inorganic chemicals and petroleum products keeping India’s outbound shipments on positive trajectory.

Amidst a ballooning trade deficit of USD 19.1 billion in April 2024, India’s exports increased sluggishly by 1.08 per cent year-on-year at USD 34.99 billion last month — as compared to USD 34.62 billion in April 2023 – with electronic goods, organic and inorganic chemicals, petroleum products and drugs and pharmaceuticals acting as main drivers of merchandise exports growth during April 2024. Merchandise imports in April 2024 were USD 54.09 billion, as compared to USD 49.06 billion in April 2023.

Commerce Secretary Sunil Barthwal said the new fiscal year had started on a good note and hoped that it continues. Aditi Nayar, Chief Economist ICRA notes that this was the highest merchandise trade deficit print in four months and was also much higher than ICRA’s expectations. “Notably, the widening in the non-oil deficit in April 2024 vis-à-vis April 2023 was entirely driven by a tripling in gold imports, partly aided by the surge in gold prices.

The total exports of merchandise and services in the first month of FY 2024-25 show strong growth of 6.88 per cent at USD 64.56 billion compared to USD 60.40 billion in April 2023. The total imports of merchandise and services combined in April 2024 is estimated to be USD 71.07 billion, exhibiting a positive growth of 12.78 per cent over April 2023. Ashwani Kumar, FIEO president, views the USD 34.62 billion exports in April 2023 as a positive start to the new financial year 2024-25 even during challenging times. “The ongoing Russia-Ukraine war coupled with various major geo-political tensions including the Red Sea crisis and Israel-Hamas conflict has also made the international trade scenario much tougher for the Indian exporters,” says Kumar.

Sectorally, export of non-petroleum and non-gems and jewellery which comprises the basket of gold, silver and precious metals, registered increase of 1.32 per cent to USD 26.11 billion in April 2024 from USD 25.77 billion in April 2023. Import of gold, silver and precious metals in April 2024 were USD 32.72 billion, compared to USD 32.13 billion in April 2023.

Electronic goods exports increased by 25.8 per cent from USD 2.11 billion in April 2023 to USD 2.65 billion in April 2024, organic and inorganic chemicals increased by 16.75 per cent from USD 2.14 billion in April 2023 to USD 2.50 billion in April 2024. Drugs and pharmaceuticals exports increased by 7.36 per cent from USD 2.26 billion in April 2023 to USD 2.43 billion in April 2024. Petroleum products exports were up by 3.10 per cent from USD 6.42 billion in April 2023 to USD 6.62 billion in April 2024.

In merchandise exports, 13 of the 30 key sectors exhibited positive growth in April 2024 as compared to same period last year (April 2023). These include coffee, tobacco, spices, cotton Yarn/Fabs./Made-Ups, handloom products etc, carpet, cereal preparations and miscellaneous processed items, petroleum products, plastic and linoleum and handicrafts excluding handmade carpet.

In merchandise imports, 14 out of 30 key sectors exhibited negative growth in April 2024. These include sulphur and unroasted iron pyrites, pearls, precious and semi-precious stones, cotton raw and waste, wood and wood products, coal, coke and briquettes, artificial resins, plastic materials, fertilisers, crude and manufactured, iron and steel, chemical material and products, organic and inorganic chemicals, machinery, electrical and non-electrical, dyeing/tanning/colouring materials, pulp and waste paper and transport equipment.

Services export for April 2024 also fell to USD 29.57 billion, as compared to USD 25.78 billion in April 2023. Services import for April 2024 stood at USD 16.97 billion as compared to USD 13.96 billion in April 2023.

India nears landmark deal with Iran to manage Chabahar Port, enhancing regional connectivity and strategic influence.

India is poised to finalize a deal with Iran for the management of Chabahar Port over the next ten years, marking India’s inaugural overseas port management venture. Shipping Minister Sarbananda Sonowal is set to journey to Iran for the signing ceremony on Monday.

Efforts are underway to link Chabahar Port with the International North-South Transport Corridor (INSTC), enhancing India’s connectivity with Russia through Iran. “As and when a long-term arrangement is concluded, it will clear the pathway for bigger investments to be made in the port,” Foreign Minister S Jaishankar told reporters in Mumbai.

By leveraging Chabahar Port, India aims to bypass Pakistan and establish direct access to Afghanistan and beyond, into Central Asia. Chabahar Port holds strategic importance for India as it serves as a vital link connecting the country to Afghanistan, Central Asia, and the broader Eurasian region. Moreover, this initiative is seen as a counterbalance to Pakistan’s Gwadar port and China’s Belt and Road Initiative.

Discussions on the development of Chabahar date back to 2003. In 2013, India committed to investing $100 million towards the development of Chabahar. The partnership on Chabahar Port was established in 2016 during Prime Minister Narendra Modi’s visit to Iran. During this time, India also agreed to invest $85 million in the development of the Shahid Beheshti terminal. In 2018, then Iran president Hassan Rouhani further discussed expanding India’s role in the port, and discussions have continued during subsequent high-level exchanges.

While the existing pact between the two nations covers operations at the Shahid Beheshti terminal and is renewed annually, the new 10-year agreement is designed to supersede the original contract, providing a more robust framework for India’s involvement in Chabahar Port’s operations.

Landlocked Central Asian nations, such as Kazakhstan and Uzbekistan, also stand to benefit significantly from leveraging Chabahar as a gateway to the Indian Ocean Region and Indian markets.

The timing of the agreement coincides with the escalating crisis in West Asia following Israel’s attack on Palestine, which has disrupted key trade routes and accentuated the urgency of bolstering regional connectivity. The Ministry of External Affairs (MEA) in April approved a proposal for India Ports Global to assume operational control of Myanmar’s Sittwe Port in the Bay of Bengal.

Sonowal’s visit during this critical juncture highlights the importance of the impending agreement, which has been in the pipeline for several years.

The introduction of higher import duties and the Quality Control Order (QCO) has significantly impacted the toy trade in India with imports falling drastically from USD 304.1 million in FY2019 to USD 64.9 million in FY2024. Decisive steps—which include raising import duties—to curb the inflow of substandard toy imports by the Indian Government since 2020, especially from China, while simultaneously strengthening the domestic toy industry, as per a latest insight from Global Trade Research Initiative (GTRI).

The steepest decline occurred between FY2020 and FY2022, demonstrating the direct impact of the new regulations. Imports dropped from USD 279.3 million in FY2020 to USD 35.9 million by FY2022, then slightly rose to USD 62.4 million in FY2023 and USD 64.9 million in FY2024. This sharp decrease over the last four years is directly due to (QCO) measures, as per GTRI data. There was an increase in imports from other regions such as ASEAN countries, Sri Lanka, and the Czech Republic.

One of the foremost impacts was that the share of imports from China dropped from 87 per cent of India’s total toy imports in FY2019 to 64 per cent in FY2024. The Indian toy industry has an estimated value of USD 3 billion in contrast, to USD100 billion of China. In FY2019, share of China was 87 per cent in India’s global imports of USD 304.1 million. In FY2024, share of China was 64 per cent in India’s global imports of USD 64.9 million. Share of other suppliers was ASEAN with 16.7 per cent, Sri Lanka with 12.4 per cent and Czech Republic contributing 4.7 per cent.

Government data quotes an IIM Lucknow case study to highlight that Indian toy industry witnessed remarkable growth in FY 2022-23 in comparison to FY 2014-15, with the decline in imports by 52 per cent rise in exports by 239 per cent and development of overall quality of the toys available in the domestic market. The study at the behest of Department for Promotion of Industry and Internal Trade (DPIIT) shows that the efforts of the Government have enabled in creation of a more conducive manufacturing ecosystem for the industry in a span of 6 years, from 2014 to 2020, which has seen doubling of the number of manufacturing units, reduction in dependence on imported inputs from 33 per cent to 12 per cent, increase in gross sales value by a CAGR of 10 per cent, and overall rise in labour productivity.

According to GTRI, Government measures which have focused on increasing import duties and introducing the QCO. India dramatically raised import duties on toys beginning in February 2020. The basic customs duty was increased from 20 per cent to 60 per cent and then to 70 per cent in July 2021, where it currently remains. This substantial increase in duties made imported toys significantly more expensive, thus creating a competitive advantage for locally produced toys. The second intervention in the form of QCO, implemented from January 2021, mandates that all toys sold in India, whether domestically produced or imported, must comply with specific Indian standards for safety.

However, according Ajay Srivastava, founder GTRI, exports did not benefit from the QCO. While the domestic measures were primarily aimed at boosting local industry and ensuring safety, they did not significantly enhance India’s toy exports. From FY2020 to FY2022, exports increased modestly from USD 129.6 million to USD177 million. However, by FY2024, exports had decreased to USD 152.3 million. India exported electronic toys worth USD 25.7 million and imported such toys worth USD 0.06 million, exported plastic dolls, metal and other non-electronic toys amounting to USD 78.74 million, while imports were at USD 18.74 million. Parts of electronic toys saw exports of USD 0.15 million and imports of USD 20.99 million. Parts of other toys category had exports worth USD 47.75 million and imports of USD 25.13 million.

The report suggests more comprehensive approach for development of toy industry with focus on developing a robust domestic ecosystem by investing in research and development to foster innovation in toy design and functionality and positioning Indian toys competitively on the global stage. The GTRI suggests strengthening partnerships between toy manufacturers and design institutes to continuously introduce innovative products and establishing specialised toy manufacturing hubs to reduce costs and increase efficiency. Modernising traditional Indian toys while preserving their cultural value to create unique products and support to small and medium enterprises in leveraging digital marketing and promoting Indian toys at international fairs to establish global connections are the other recommendations.

• In 2022, the global market imported toys valued at approximately US$60.3 billion.
• Dominating this market, China exported toys worth US$48.3 billion, securing an 80 per cent share of the global exports.
• Other significant contributors to the global toy export market include the Czech Republic with exports of US$3.2 billion, the European Union with US$2.7 billion, Vietnam with US$1.7 billion, and Hong Kong with US$1.1 billion.
• India’s share in the global toy export market is minimal, totalling USD167 million, which represents only 0.3 per cent of the global exports, ranking it 27th. On the import side, India ranks even lower, at 61st, with toy imports amounting to USD 60 million.
• The largest importers of toys are led by the USA, which alone imported toys worth USD 22.2 billion.
• The European Union followed with imports totalling USD 9 billion and other significant importers include Japan at USD 2.8 billion, Canada at US$1.6 billion, Australia at US$1.5 billion, Mexico at US$1.1 billion, and South Korea at US$927 million.
• This distribution highlights the vast potential and opportunities in the global toy trade, areas where India could aim to increase its presence.

That apart, says Srivastava, there is need to encourage global toy brands to manufacture in India and invite international toy manufacturers who currently operate in China, such as Hasbro, Mattel, Lego, Spin Master and MGA Entertainment to consider setting up facilities in India. This move could help shift part of the global toy production market to India. There are also lessons from China like analysing and adopting best practices from Chinese manufacturers who manage a vast range of toy types and scale production efficiently. India could study the capacity to produce both low-cost and high-quality toys, handle a wide range of toy types, from simple plush toys to complex electronic gadgets and easily scale production up or down to meet the demands of international brands.

The GTRI founder also emphasises on reducing dependency on imports by developing local production capabilities for critical toy-making materials and components, such as glass eyes for dolls, beads, imitation stones, various types of plastics, electric motors and remote control apparatus will decrease costs and enhance the self-sufficiency of the Indian toy industry. Imports of inputs used for making toys is much higher than import of finished toys. For example, India imported glass eyes for dolls or other toys, beads and imitation stones of value USD 137.2 million in FY2024. These steps aim to not only strengthen India’s position in the global toy market but also ensure a sustainable and innovative domestic industry that can meet both local and international demands.

The central government has permitted exports of 14,000 tons of non-basmati white rice to Mauritius.

The central government has granted approval for the export of 14,000 tonnes of non-basmati white rice to Mauritius. This decision is significant considering that the export of non-basmati white rice was prohibited in July 2023 to stabilize domestic prices and ensure food security within the country. The exports to Mauritius will be facilitated through National Cooperative Exports Limited, as stated in the notification by the Directorate General of Foreign Trade. Previously, India had permitted the export of similar rice varieties to Nepal, Cameroon, Cote d’Ivoire, the Republic of Guinea, Malaysia, the Philippines, Seychelles, the UAE, Singapore, Comoros, Madagascar, Equatorial Guinea, Egypt, and Kenya, albeit in varying quantities.

While initially amending the rice export policy, DGFT maintained that the export would be allowed based on permission granted by the government to other countries to meet their food security needs and based on the request of their government. West African country Benin is one of the major importers of non-basmati rice from India. Other destination countries are UAE, Nepal, Bangladesh, China, Cote D’ Ivoire, Togo, Senegal, Guinea, Vietnam, Djibouti, Madagascar, Cameroon, Somalia, Malaysia, and Liberia.

In late August, India also introduced additional safeguards by imposing a minimum floor price on exports of basmati rice to prevent exports of non-basmati white rice, which was already under the prohibited category since July.

The central government extended the 20 per cent export duty on parboiled rice till March 31, 2024. Rice which is partially boiled with husk is called parboiled rice. Initially, the duty was introduced on August 25, 2023, and was due to remain effective till October 16, 2023, aimed at maintaining adequate domestic availability and checking its price.

India in September 2022 banned the exports of broken rice and imposed a 20 per cent duty on exports of non-Basmati rice, except for parboiled rice amid concerns about low production due to a fall in the area under the paddy crop. It later lifted the ban in November.

In April, liquefied natural gas (LNG) futures trading volumes experienced a significant surge amidst rising demand and geopolitical tensions, indicating robust activity in anticipation of the upcoming summer season. India, a key player in the global LNG market, has witnessed a steady increase in LNG imports driven by various sectors such as power, industry, and transportation.

Data from March 2024 revealed that India’s total LNG imports, including both long-term contracts and spot purchases, amounted to 1.9 million metric tonnes (MMT), valued at USD 1113 million. Over the fiscal year 2023-24, India’s cumulative LNG imports reached 23.3 MMT, totaling USD 13266 million. Forecasts suggest a further 7-8% increase in LNG imports in 2024, driven by growing demand and ongoing infrastructure development initiatives.

India’s aspirations to enhance its LNG import capacity align with its goal to increase the share of natural gas in its energy mix to 15% by 2030, aiming to reduce reliance on more polluting fossil fuels like coal and oil. Market data from S&P Global Commodity Insights indicated a significant uptick in Japan Korea Marker (JKM) LNG futures and JKM LNG balance-month next-day futures trading volumes in April, reflecting heightened market activity.

According to the Intercontinental Exchange (ICE), LNG futures trading volumes experienced a notable month-on-month increase of 5.65% and a remarkable year-on-year rise of 134.43%, with 87,209 lots cleared. These derivative contracts, equivalent to approximately 16.77 million metric tonnes or 264 cargoes, underscore strong trading interest in LNG futures. Open interest for these contracts reached a 26-month high of 107,972 lots by the end of April, demonstrating robust market participation.

Analysts attribute the surge in LNG futures trading to various factors, including a spike in Asia-Pacific spot LNG prices amidst geopolitical tensions. Market sentiment turned cautious following increased risks, particularly the conflict between Iran and Israel in mid-April. The Platts JKM, a key benchmark reflecting LNG delivered to Northeast Asia, witnessed an increase in April, with the average price rising to USD 10.07/MMBtu compared to USD 9.15/MMBtu in March.