India’s goods and services trade witnessed strong momentum in the December quarter of 2024, according to a report by the United Nations Conference on Trade and Development (UNCTAD).
However, the report also cautioned that global trade could face significant disruptions due to policy shifts in the United States, as well as ongoing trade and geopolitical tensions.
UNCTAD’s latest Global Trade Update highlighted that developing nations are burdened with high tariffs that limit their market access.
The report pointed out that exports from South Asia face among the highest tariffs globally, averaging around 4%.
In contrast, imports to the region and Africa are subject to an even higher average tariff of approximately 8%.
Despite generally lower tariffs in developed countries, UNCTAD observed that these nations maintain ‘tariff peaks’ on certain products, particularly agricultural goods, with duties exceeding 100% in some cases.
South Asia was again noted as leading in this regard.
The report also noted that many developing nations maintain higher duties on imports as a means of supporting nascent industries.
These nations also have greater flexibility during trade negotiations.
Additionally, for some countries, tariffs serve as a crucial revenue source, contributing between 10% and 30% of government revenue.
UNCTAD observed strong trade growth in India and China during the December quarter.
India reported a robust 7% growth in goods and services trade, while China saw a 5% increase.
The report stated that developing countries, particularly India and China, experienced better-than-average trade expansion, while many developed nations faced trade contractions.
India’s export performance in 2024 showed significant strength.
The country’s export of goods and services grew by 6.3%, outpacing the global annual trade growth of 3.7%.
India’s exports reached $817.4 billion in 2024, compared to $769 billion in 2023, marking a notable increase.
The report also highlighted growth in services trade, with South Africa experiencing a 13% increase in services exports, while India saw a more modest 3% growth during the December quarter.
UNCTAD raised concerns about India’s growing trade deficit, especially with China and Russia.
In 2024, India’s trade deficit with China stood at $103 billion, making it the seventh-highest among bilateral trading partners.
Russia followed with a $65 billion trade deficit, ranking 12th.
India’s trade deficit with China has widened in recent years, particularly as its exports to China have declined.
Meanwhile, the deficit with Russia has increased due to the importation of large quantities of crude petroleum.
Oil companies have capitalized on bargain prices and are exporting finished products to other regions, especially in the wake of sanctions imposed on Russia.
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