With its large population and strong GDP growth, India is poised to be a future giant of world trade. According to new research from Standard Chartered, trade readiness is where the market really stands out from the pack, scoring high on factors including the quality of trade, transport infrastructure, digital infrastructure, e-commerce and ease of doing business.
The Trade20 index, which also looks at economic dynamism (foreign direct investment, export and GDP growth) and export diversity (the range of exports), ranks India high on trade readiness (infrastructure, e-commerce, and ease of doing business), reflecting the large-scale infrastructure upgrades and regulatory overhauls that have taken place in the market in the last decade.
India’s substantial business reforms have made it easier to start a business, obtain construction permits, raise finance, pay taxes and import and export goods.
It has also spearheaded mobile payment innovations, witnessed rapid e-commerce growth, and used technology to revamp the taxation system.
India is likely to continue to prioritise trade as a key engine of growth, with the government especially focused on relationships with the US and China, despite recent geo-political tensions.
What can India do to stay ahead?
The government, with its mantra of “Reform, Perform and Transform” used its first budget to focus on stimulating growth, simplifying tax, digitising the economy, further improving ease of doing business, and pushing forward with the “Make in India” initiative.
The latter aims to encourage companies to manufacture their products in the country, with the intention of making India a global manufacturing hub.
This year India was highlighted as a dominant member of Standard Chartered’s 7% Club, the group of economies sustaining a GDP growth rate of 7% or above, which means they could double in size in a decade. Given some signs of slowdown recently due to global tensions and weaker household demand, Standard Chartered still expects solid GDP growth at 6.2%.
Ricky Kaura, Transaction Banking Head of EAST, Standard Chartered, said:“Policy improvements and the government’s focus on promoting the country as a manufacturing hub are clearly paying off. We expect to see higher investments flowing into India, which will ultimately result in increased domestic and cross-border trade.
We also see tremendous potential for growth in trade digitisation backed by newer technologies, clients willing to experiment and facilitative government and regulatory mechanisms.”