India may leverage G20 presidency to promote trade with major world economies

The Group of Twenty (G20) is a forum comprising 19 countries and the European Union. It brings together major economies, both advanced as well as emerging, which together represent around two-thirds of the world population, 75% of global trade and 85% of the world’s GDP. India, being one of the major developing economies, has an important role in the G20 due to its considerable influence in the international economy. This influence will be further enhanced with India stepping into the G20 presidency from December 1, 2022 to November 30, 2023. This presidency provides an opportunity for India to promote itself as a reliable trade partner.

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India’s trade relation with G20 economies

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As a trade bloc, the G20 is of key significance for India’s economic stability and growth. India’s trade with G20 member states accounts for more than half of its total merchandise trade. India's total merchandise trade with G20 member economies (as of calendar year 2021) stood at USD 542 billion representing 56% of its total trade. India exported USD 232 billion worth of goods to the G20 member states in 2021 representing 59% of its total export for the year whereas, India’s import from the G20 economies for the year stood at USD 310 billion accounting for 54% of its total merchandise imports.

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The trade between India and G20 member economies has been on a steady rise through the last decade. India’s export growth to the group has outpaced import growth from the group with exports more than doubling in the last decade from USD 115 billion in 2010 to USD 232 billion in 2021. At the same time, India’s imports from the group has grown by 71% from USD 182 billion in 2010 to USD 310 billion in 2021

However, country wise analysis of export data indicates that the above export growth is mostly concentrated towards few countries and is majorly driven by export growth to the US. India’s share in imports of major G20 economies excluding the USA has remained stagnant over the decade. India’s share in China’s total merchandise imports declined from 1.25% in 2010 to 0.86% in 2021 whereas, China’s share in global imports grew from 9% to 12% during the same period. Though India’s share in imports of EU and Japan has improved over the decade from 0.76% and 0.69% in 2010 to 0.93% and 0.79%, it still remains below the 1% mark. EU (28%), China (12%), Japan (3%) together account for 43% of world merchandise imports amounting to USD 9.8 trillion, of which India supplies only USD 88 billion worth goods. The gap indicates the existence of huge untapped trade potential for India which is yet to be explored.??????????

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Conclusion

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The analysis indicates that India has been unable to tap into the world’s largest importing markets. In order to become globally competitive in exports India may look to diversify its export basket which is mostly dominated by low-value labour intensive commodities such as textiles and agro commodities to value-added and capital intensive goods. Efforts for better integration into the global value chain will also promote exports from India to the major economies.??