UPSC Daily Editorial Analysis | 6 May 2022

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What the article is about?

  • Talks about the present global trade environment and how India can seize the moment.

Syllabus: GS-III Economy, Trade; GS-II International Relations

Current Global environment:

  • Slower global growth, an adverse geopolitical environment, the shadow of recurring waves of the pandemic and prolonged supply chain issues are likely to weigh on export growth this year.
  • This uncertain global economic environment calls for proactive policy actions as exporters look to tap into newer opportunities.
    • Ukraine and Sri Lanka are major exporters of agricultural products and the vacuum created by their limited presence in global trade will open up agricultural export opportunities for India.
    • Sri Lanka is also a major player in the global tea market and produces around 300 million kg annually.
      • India, the second-largest producer of tea with an annual production of 900 million kg, is in a good position to exploit the opportunity and fill the gap.
    • Apart from tea and wheat, newer export opportunities have arisen for textiles. 

Measures to tap these opportunities:

  • One, work on non-tariff barriers for agricultural trade with a special focus on harmonising the sanitary and phytosanitary (SPS) requirements.
    • SPS barriers can be addressed in various ways including through scientific collaborations for the implementation of sector-specific measures and strengthening the traceability system in supply chains.
  • Two, to support tea exports, traditional tea boards are seeking a greater role and autonomy for optimising the development, promotion, and research in the sector.
    • Quicker implementation of the proposed Tea Promotion and Development Act is of utmost importance.
  • Three, India must double down on its integration with global supply chains.
  • Four, tariff rates for intermediate inputs should be reduced to either zero or should be negligible for India to become an attractive location for assembly activities.
  • Five, India must persist with the creation of an enabling ecosystem that realigns its specialisation patterns towards labour-intensive processes and product lines.
    • The labour market reforms must be taken to their logical conclusion.
  • Six, a continuous and pro-active FDI policy is also critical as foreign capital and technology are key enablers for entry into global production networks even as local firms play a role as subcontractors and suppliers of intermediate inputs to MNEs.


  • The Economic Survey 2019 had recommended that low levels of service link costs (costs related to transportation, communication, and other tasks involved in coordinating the activity etc) are prerequisites to strengthen their participation in GVCs.

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