Despite India’s initiatives to reduce dependence on China through schemes like the production-linked incentive scheme and quality control orders, the reliance on China saw a rise.
The recent report by the UN Conference on Trade and Development (UNCTAD) highlighted a decline in global trade across most sectors last year, except for pharmaceuticals, transportation equipment, and road vehicles. It noted that sectors like apparel, textiles, and chemicals experienced a decline in trade value by more than 10%.
According to the report, there has been a significant shift in global trade patterns due to geopolitical factors and the restructuring of supply chains following the impacts of the COVID-19 pandemic and the Russia-Ukraine war. The report indicated that India’s trade reliance on China and the European Union (EU) increased by an estimated 1.2 per cent. Despite India’s initiatives to reduce dependence on China through schemes like the production-linked incentive scheme and quality control orders, the reliance on China saw a rise.
On the other hand, India’s trade dependence on Saudi Arabia decreased by 0.6 per cent, as per the report. UNCTAD also estimated a notable change in trade dynamics due to the Russia-Ukraine conflict. While Russia’s trade dependence on China increased by 7.1 per cent, its reliance on the EU decreased by 5.3 per cent. This shift was attributed to the redirection of Russian oil from the EU to China and India.
Chinese customs data revealed that two-way trade between China and Russia reached $ 240 billion last year. Russia also increased its imports of Chinese goods following the departure of major US and EU companies from the Russian market post-war.
The UNCTAD report stated that over the past two years, the geographical proximity of international trade remained relatively stable, indicating minimal near shoring or far-shoring trends. However, since the latter part of 2022, there has been a noticeable increase in the political proximity of trade. This suggests a preference for bilateral trade between countries with similar geopolitical stances. Additionally, there has been a concentration of global trade favouring major trade relationships, although this trend softened in the last quarter of 2023.
Despite these global trends, the United States managed to decrease its reliance on China by 1.2 per cent last year, while increasing its trade dependence on the EU and Mexico.
News source: Fibre2Fashion