India's exports to China have grown much faster than to US post the trade war between the two largest economies,State Bank of India said on Monday.
While overall exports to US grew by 9.46% to $52.4 billion in FY19, for China the growth was 25.6% to $16.7 billion.
“Looking at the products on which China and USA have imposed tariffs on each other, India has made modest gains in capturing such market,” said Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI in a report.
Citing the example of textile imports of US, which have shifted from China towards other countries in South Asia, the bank said that though India has gained in the first five months of 2019, but Vietnam and Bangladesh have witnessed much larger increase in exports to USA.
Alternatively, cotton imports from USA to China have declined for the first half of 2019 visà-vis H1 2018 and imports from other countries including Brazil, Australia and India have increased.
“Thus India has benefitted from US-China trade war by exporting more to China like plastic, cotton, inorganic chemicals and fish. Interestingly, India has a revealed comparative advantage in some of these commodities,” Ghosh said.
As per the report, to further give a boost to exports, easy availability of credit is of paramount importance. Certain measures including extension of Interest Equalization Scheme to all categories of exporters and end to end digitization of the export process among others should aid our export credit growth.
“Loans under Credit Guarantee Fund Trust for Micro and Small Enterprises could be provided for export-oriented units in MSME sector with a cap of Rs 5 crore and reduced annual guarantee fee,” Ghosh said
The bank has suggested the Export Refinance Scheme to be reintroduced by the Reserve Bank of India in INR and foreign currency.
Export Credit Guarantee Corporation of India (ECGC) empanelled Credit Information Bureau may provide opinion report on real time basis on entities abroad.