India and Nigeria have decided to finalize a local currency settlement system agreement soon and have identified several areas of focus for economic cooperation, including digital economy and digital public infrastructure, crude oil and natural gas, and pharmaceuticals. These decisions follow the 2nd session of the India-Nigeria Joint Trade Committee held in Abuja on Thursday.

Nigeria is India’s 2nd largest trading partner in the Africa region. Bilateral trade between India and Nigeria stood at USD 11.8 billion in 2022-23. However, in 2023-24, bilateral trade declined to 7.89 billion. With a total investment of USD 27 billion, approximately 135 Indian companies are actively engaged in Nigeria’s vibrant market. These investments span diverse sectors, including infrastructure, manufacturing, consumer goods, and services.

A seven-member delegation from India led by Additional Secretary, Department of Commerce, Ministry of Commerce and Industry Amardeep Singh Bhatia, accompanied by High Commissioner of India to Nigeria G Balasubramanian and Economic Adviser, Department of Commerce Priya P. Nair, held a Joint Trade Committee (JTC) meeting with their Nigerian counterparts in Abuja from 29-30 April 2024. The JTC was co-chaired by Permanent Secretary, Federal Ministry of Industry, Trade and Investment, Nigeria, Ambassador Nura Abba Rimi, and Additional Secretary, Department of Commerce.

In a comprehensive dialogue, both sides undertook a detailed review of recent developments in bilateral trade and investment ties and acknowledged the vast untapped potential for further expansion. To this effect, both sides identified several areas of focus for enhancing both bilateral trade as well as mutually beneficial investments. These areas include resolving market access issues, cooperation in key sectors such as crude oil and natural gas, pharmaceuticals, unified payments interface, local currency settlement system, power sector and renewable energy, agriculture and food processing, education, transport, railway, aviation, MSME development, etc.

The official delegation from India included officials from the Reserve Bank of India (RBI), EXIM Bank of India, and National Payments Corporation of India (NPCI). The officials from both sides actively engaged in the proceedings of the JTC, showing an enthusiastic response towards greater cooperation, addressing pending issues, boosting trade and investment, and fostering greater people-to-people contacts.

In a concerted effort to bolster bilateral trade, both sides committed to expeditiously address all issues impeding bilateral trade and facilitate trade promotion between the two nations. A business delegation led by CII (Confederation of Indian Industry) also accompanied the official delegation, comprising representatives from various sectors like power, fintech, telecommunications, electrical machinery, pharmaceuticals, etc.

The deliberations of the 2nd Session of the India-Nigeria JTC were cordial and forward-looking, indicative of the amicable and special relations between the two countries.

India and New Zealand are set to deepen collaboration in pharma, agriculture, and food processing industries, and enhance services sector trade after a delegation led by Commerce Secretary Sunil Barthwal held a number of constructive and outcome-oriented meetings in New Zealand to work on ways to deepen the existing bilateral relations, the Commerce Ministry said on Friday.

Following a series of these consultations with the Minister for Trade of New Zealand Todd McClay, Acting Chief Executive and Secretary of Foreign Affairs and Trade of New Zealand Brook Barrington, the India-New Zealand Business Council (INZBC) and the 11th India-New Zealand Joint Trade Committee, both sides acknowledged the existing huge potential in both economies and mutual trade complementarities as well as the scope to increase the trade and people to people contacts.

The meetings addressed bilateral trade matters of mutual interest, including issues related to market access, non-tariff barriers (NTBs), and sanitary and phytosanitary (SPS) measures on products like grapes, okra, and mangoes, mutual recognition arrangement (MRA) in organic products, simplified homologation including through mutual recognition of comparable domestic standards for vehicles, etc. Both parties reaffirmed their commitment to resolve these issues through constructive dialogue and cooperation under the existing mechanism of the JTC.

Among the focused discussions on several key areas aimed at promoting bilateral trade and cooperation, were progress on market access issues, economic cooperation projects, and explored opportunities for new initiatives. Both sides discussed the establishment of robust bilateral economic dialogue architecture and the creation of working groups on sectors like agriculture, food processing, storage and transportation, forestry, and pharmaceuticals to facilitate ongoing collaboration on key trade and economic issues.

Services sector and enhancing its scale for bilateral trade was given special focus during the discussions held at various levels which revealed great interest from both sides for increasing business to business as well as people to people contacts and to work on the skill gaps and how the same can be strengthened through capacity building and improving the ease of mobility. It touched upon areas such as hospitality sector including adventure tourism, nursing, telemedicine, education, air connectivity, Joint R&D (wherever feasible), startups, etc.

Collaboration in the area of pharmaceuticals and medical devices sector was discussed at length, including the adoption of fast-tracking of regulatory processes and quality assessment of manufacturing facilities using, as appropriate, the inspection reports of comparable overseas regulators. Greater sourcing of medicines from India and cooperation in the medical device sector was also discussed.

Both parties briefly explored opportunities for collaboration in digital trade, meeting nationally determined contributions, cross-border payment systems, among others. The discussions also included cooperation in the horticulture sector, including cooperation in the kiwi fruit sector (quality and productivity, proper storage in pack houses and their suitable transportation), as well as the dairy sector. Once working groups are established, India and New Zealand will review the progress made by those working groups and the recommendations thereof at regular intervals.

In a move aimed at strengthening bilateral trade and investment ties between Russia and India, the Chamber of Commerce and Industry (CCI) of the Russian Federation has inaugurated its second office in Mumbai. The opening ceremony was attended by a high level business delegation led by Sergey Katyrin, President of the CCI of the Russian Federation. “India is a strategic, reliable, old friend of Russia. We already have a representative office in Delhi, and now we are here to inaugurate the 2nd representative office of CCI in India at Mumbai,” said Katyrin, highlighting the significance of the occasion.

The CCI, representing over 53,000 business organizations and more than 280 business unions at the federal level, along with 750 unions at the regional level in Russia, aims to foster closer ties with India through its expanded presence in Mumbai. With more than 100 bilateral agreements signed with various countries and 30 representative offices across the globe, the decision to open a second office in India underscores the growing importance of the India-Russia business relationship.

Katyrin emphasized that both representative offices will play a pivotal role in promoting bilateral trade, investment, and technology collaboration for Russian companies in India, as well as facilitating opportunities for Indian companies in Russia. Addressing the issue of the current lopsided bilateral trade, Katyrin stated that the representative offices will work towards correcting the trade deficit by facilitating India’s exports. Aleksei Surovtsev, Consul General of the Consulate General of the Russian Federation, highlighted the significant progress made in India-Russia trade relations, with Russia now ranking as India’s 4th largest trade partner, up from the 20th position just two years ago.

The bilateral trade in goods and services has exceeded USD 55 billion, indicating the immense potential for further strengthening the partnership between the two nations. Vijay Kalantri, Chairman of MVIRDC World Trade Center Mumbai, commended the enduring friendship between India and Russia, noting that bilateral goods trade has surpassed the USD 50 billion mark this year. He expressed optimism that with sustained efforts, the two countries could achieve a trade volume of over USD 100 billion in the next three years.

The opening of the second CCI office in India comes at a crucial juncture, as both countries seek to deepen economic cooperation and explore new avenues for collaboration across various sectors. With Russia emerging as a key player in India’s trade landscape, the expanded presence of the CCI in Mumbai is expected to catalyze further growth in bilateral trade and investment flows.

With increasing dependence on Chinese industrial goods like telecom, machinery, and electronics, Beijing’s share in New Delhi’s imports of such goods rose to 30 per cent from 21 per cent in the last 15 years, according to a report by the economic think tank Global Trade Research Initiative (GTRI). The growing trade deficit with China is a cause of concern, and the strategic implications of this dependency are profound, affecting not only economic but also national security dimensions.

From 2019 to 2024, India’s exports to China have stagnated at around $16 billion annually, while imports from China surged from $70.3 billion in 2018-19 to over $101 billion in 2023-24, resulting in a cumulative trade deficit exceeding $387 billion over five years.

The Indian government and industries must evaluate and potentially recalibrate their import strategies, fostering more diversified and resilient supply chains, GTRI founder Ajay Srivastava said. This is imperative not only to mitigate economic risks but also to bolster domestic industries and reduce dependency on single-country imports, especially from a geopolitical competitor like China, he added.

“Over the last 15 years, China’s share in India’s industrial product imports has increased significantly, from 21 per cent to 30 per cent. This growth in imports from China has been much faster than India’s overall import growth, with China’s exports to India growing 2.3 times faster than India’s total imports from all other countries,” the report said.

In 2023-24, India’s total merchandise imports amounted to $677.2 billion, with $101.8 billion of that coming from China. This means China accounted for 15 per cent of India’s total imports. Out of these imports from China, $100 billion or 98.5 per cent were in major industrial product categories.

“When compared to India’s global imports of these industrial products, which total $337 billion, China’s contribution is quite significant, representing 30 per cent of India’s imports in this sector. Fifteen years ago, China’s share was just 21 per cent,” it added.

The key sectors where New Delhi’s dependence is rising significantly include electronics, telecom and electrical; machinery; chemicals and pharmaceuticals; products of iron, steel and base metal; plastics; textiles and clothing; automobiles; medical, leather, paper, glass, ships, aircraft, and remaining categories.

During April-January 2023-24, the electronics, telecom, and electrical products sectors had the highest import value at $67.8 billion, with China contributing $26.1 billion. “This represents a substantial 38.4 per cent of the total imports in this category, indicating a heavy dependence on Chinese electronic goods and components,” it said.

In the machinery sector, China accounts for $19 billion, which is 39.6 per cent of India’s imports in the sector. This underscores China’s key role as a supplier of machinery to India, Srivastava said.

India’s chemical and pharmaceutical imports during the period stood at $54.1 billion. Out of this, $15.8 billion came from China. This resulted in a Chinese share of 29.2 per cent, highlighting the importance of Chinese chemical and pharmaceutical products in India.

Similarly, the report said the total imports for plastics and related articles stand at $18.5 billion, with China providing articles worth $4.8 billion. This accounts for 25.8 per cent of the total imports in this sector.

Srivastava also said that half of the imports from China consist of capital goods and machinery, indicating a critical need for focused research and development in this area. Intermediate goods like organic chemicals, APIs (Active Pharmaceutical Ingredients), and plastics, which represent 37 per cent of imports, show a pressing need for upgrading these industries, he said, adding that consumer goods make up 12 per cent of the imports, while raw materials are less than 1 per cent.

The report added that many products imported from China, such as textiles, apparel, glassware, furniture, paper, shoes, and toys, are from categories dominated by micro, small, and medium enterprises (MSMEs), and most of these items could potentially be produced domestically.

“Overall, India imports a broad array of products from China, from high to low technology items, highlighting significant gaps in India’s industrial capabilities across various sectors,” it added.

Chinese companies are involved in India’s energy, telecommunications, and transportation sectors, and they play critical roles in smartphones, electronics, electric and passenger vehicles, solar energy, engineering projects, and many other sectors, it said.

The report said that so far, imports were carried out by Indian firms but now with the entry of Chinese firms into the Indian market, India’s industrial product imports are set to rise at an accelerated pace.

“As the Chinese firms operating in India will prefer sourcing most requirements from their parent firms, Indian imports will rise sharply. For example, in the next few years, every third electric vehicle (EV) and many passenger and commercial vehicles on Indian roads could be those made by Chinese firms in India alone or through joint ventures with Indian firms,” the report said.

The large-scale entry of Chinese automakers into India will impact the domestic auto/EV manufacturers, firms working in the EV value chain space and battery development, it added.

The decline in manufacturing has severely impacted smaller economies, hindering their ability to participate in global production, upgrade production methods and adopt new technologies.

A significant shift has taken place in the global economy with the growth of foreign direct investment (FDI) and global value chains (GVCs) no longer aligned with GDP and trade growth and even amidst rising trade tensions, global GDP and trade, since 2010, have continued to expand at an annual average of 3.4 per cent and 4.2 per cent respectively. In stark contrast, FDI growth has stagnated near zero per cent in the midst of rising protectionism, growing geopolitical tensions, and increased investor caution, says the latest UN Trade and Development (UNCTAD) report “Global economic fracturing and shifting investment patterns” launched on 23rd April.

The report examines the complex landscape of global FDI and sheds light on how over the past two decades, transformative shifts driven by technological advances, policy developments, and sustainability demands have reshaped globalization, compelling FDI patterns to adapt in three key aspects. It emphasizes the necessity of integrating sustainability and development into investment strategies and calls for innovative investment strategies to foster inclusive and sustainable economic growth.

Second, notes UNTAD, there is a widening gap in investment trends between manufacturing and services sectors with investments increasingly leaning towards services. From 2004 to 2023, the share of cross-border greenfield projects in the services sector grew from 66 per cent to 81 per cent, and services-related investment within manufacturing industries nearly doubled to about 70 per cent, driven by technological advances. Simultaneously, FDI in manufacturing was stagnating for two decades before going down significantly, with a negative compound annual growth rate of -12 per cent in the three years after the outbreak of the Covid-19 pandemic.

The decline in manufacturing has severely impacted smaller economies, hindering their ability to participate in global production, upgrade production methods, and adopt new technologies. On the other hand, expansion of the services sector mainly benefits larger developing economies that can effectively compete, creating an imbalance that leaves smaller ones at a disadvantage, accentuating disparities and underscoring the need for policies that provide all developing countries equal opportunities.

The decline severely hinders developing economies’ efforts to leverage participation in GVCs for economic development and industrial transformation.

The share of cross-border greenfield projects in the services sector rose from about 65% two decades ago to over 80%. And services-related investment within manufacturing industries nearly doubled to about 70%, driven by technological advances.

Meanwhile, FDI in manufacturing has seen a significant downturn, with a compound annual growth rate of -12% in the three years following the outbreak of the pandemic. The decline severely hinders developing economies’ efforts to leverage participation in GVCs for economic development and industrial transformation.

A key finding of the report is that investment patterns in China have delinked from the rest of the world with the geography of global FDI being significantly re-shaped by China’s reduced role as a recipient country, a process that accelerated after the outbreak of the COVID-19 pandemic. Over the past three years, the number of greenfield projects to China has hovered at a level around one third the same figure a decade ago. Multinational corporations have shown diminishing enthusiasm for launching new investments in China. However, China continues to play a dominant role in global manufacturing and trade, suggesting that its “global factory” mode has not downsized but instead transitioned from globally integrated production networks to more domestically focused ones.

The UNCTAD report flags concern over the transition from divergence to fracturing in global investment patterns amidst recent global conflicts and crises which have disrupted usual investment patterns, leading to unstable investment relationships and limited chances to benefit from strategic diversification. The report cautions that FDI decisions are now more frequently influenced by geopolitical factors, at times overriding economic determinants, complicating standard approaches to investment promotion and hindering FDI-based development.

Investments between geopolitically distant countries – those with divergent political interests or foreign policies – decreased from 23 pr cent in 2013 to 13 pr cent in 2022. This trend particularly affected the manufacturing sector as trade tensions began to escalate in 2019.

The transition from divergence to fracturing and sectoral shifts and geographic rebalancing of FDI offer potential benefits but these are likely to be available only to a small group of developing economies. Most others face declining manufacturing investment and a shrinking pool of efficiency-seeking, lower value-added projects to leverage for GVC participation. Heightened uncertainty and fracturing are eroding the predictable and open global investment environment upon which they rely to support their development objectives.

The other cause for worry, says UNCTAD, is that despite progress toward sustainability and the sustainable development goals (SDGs), impact on developing nations are mixed. The sustainability imperative and the drive to stimulate investment in the SDGs have opened new opportunities for investment-driven industrial development, particularly in environmental technologies. However, these new opportunities can only compensate in part for the lack of FDI growth in other industrial sectors.

The growing trend of FDI to environmental technologies offers new opportunities but fails to fully address the slowdown in other industries, specially affecting developing and least developed countries increasing the vulnerability of their economies. Investments in environmental technologies like wind and solar energy have surged. Their share of total greenfield projects in non-services sectors jumped from 1 per cent in the early 2000s to 20 per cent by 2023. Likewise, FDI in the manufacturing of electric vehicles and batteries has seen 27% annual growth over the past decade. However, this growth only partially offsets the decline in other manufacturing sectors. It also primarily benefits developed countries, while least developed countries (LDCs) continue to struggle with reduced FDI in traditional sectors.

Given the imperative to bridge investment disparities across sectors and regions, UNCTAD has called for immediate action to ensure that the benefits of investment are distributed more equitably and aligned with overarching developmental objectives. The key policy recommendations from UN Trade and Development underline the need for developing countries to revise their economic development strategies and calls on global policymakers, business leaders, and development agencies to enhance collaboration at global and regional levels and work towards a more open and fairer global investment environment.

The bilateral ties nosedived after India abrogated Article 370 of the Constitution, revoking the special status of J&K and bifurcating the State into 2 UTs on 5 August, 2019.

Pakistan business leaders in an interactive session with Prime Minister Shehbaz Sharif urged him to initiate trade talks with India to promote business and commerce which would greatly benefit the economy of the cash strapped country. Posing tough questions during an hour-long meeting at the Sindh CM House here in Pakistan’s commercial capital on Wednesday, Karachi’s business community appreciated the prime minister’s determination to tackle economic issues but advised him to focus on bringing about political stability to turn around the economy.

The Prime Minister sat down with the business community to find ways to uplift the economy through exports but his resolve was met with apprehensions from industry leaders who said it was almost impossible to do business under the current circumstances, particularly with high energy costs and inconsistent government policies, the Dawn newspaper reported. After the prime minister’s brief speech, the house was opened for a question and answer session, during which business leaders voiced their appreciation for the government’s recent moves, but made more demands. They also shared proposals for economic policies to achieve desired results.

There was a sense of concern among the business leaders over the political instability in the country for which they even advised the Prime Minister to take initiative as the head of the government. You have made a few handshakes after taking charge that have produced good results and progress on the IMF deal is one of them, said Arif Habib, the chief of Arif Habib Group a capital market giant. They also asked the prime minister to initiate the trade talks with India, the report added. I suggest you do a few more handshakes. One of them is regarding trade with India, which would greatly benefit our economy. Secondly, you should also (patch up) with a resident of Adiala Jail (a reference to jailed PTI leader Imran Khan). Try to fix things at that level as well and I believe that you can do it.

The bilateral ties nosedived after India abrogated Article 370 of the Constitution, revoking the special status of Jammu and Kashmir and bifurcating the State into two Union Territories on August 5, 2019. India’s decision evoked strong reactions from Pakistan, which downgraded diplomatic ties and expelled the Indian envoy. Pakistan has also cut off direct trade ties with India. India has repeatedly told Pakistan that Jammu and Kashmir was, is and shall forever remain an integral part of the country.

Prime Minister Sharif avoided responding directly to the questions aimed at political stability, but claimed to have noted down his proposals for economic growth and assured him that he would soon invite businessmen from all across the country to Islamabad and sit with them till all the issues aren’t resolved. The business leader also suggested Shehbaz initiate talks with imprisoned PTI founding chairman Imran Khan apparently for political stability.

Shehbaz, who had arrived in the port city on his maiden visit after assuming charge last month, said the meeting was an attempt to listen to the brilliant minds of business, absorb what they say and put it into action for a comprehensive economic growth roadmap. You all are great minds of business… Today we need you to take a step forward and bring this rental business to an end. Let’s focus on genuine industrial and agricultural growth and double the exports in the next five years. It’s difficult but not impossible. It’s an article of faith for me. I would listen to you and make a plan to put that into action. In a veiled reference to the booming economy of Bangladesh, he recalled East Pakistan’, which was once considered a burden on the country, but had made tremendous strides in industrial growth. I was quite young when… we were told that it’s a burden on our shoulders…Today you all know where that burden’ has reached (in terms of economic growth). And we feel ashamed when we look towards them, said Prime Minister Shehbaz.