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Robust, Accessible Trade Finance System Key To Achieve $2 Tn Exports By 2030

India has set a target of USD 2 trillion exports, with equal contributions from goods and services by 2030

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A robust and accessible trade finance system is the key to achieving USD 2 trillion exports from trade and services by 2030, said Subhash Chandra Aggarwal, Additional DGFT, Ministry of Commerce and Industry on Thursday. 

Speaking at an Assocham event on trade finance, he said that the easy availability and cost of finance are important factors for export competitiveness. 

Aggarwal stated that trade is dependent on the availability of finance making the linkage a strong one. 

"There are multiple dimensions to and we have to improve our physical infrastructure, digital infrastructure and trade finance infrastructure, this has to happen in tandem as they are closely interlinked," he added. 

Talking about the new foreign trade policy (FTP) 2023 which focuses on key areas such as the liberalisation of merchanting trade, he added, "We are hopeful that it will strengthen mercantile trading in the country. I am often told that obtaining finances for domestic trade is easier than obtaining financing for cross-border trade."

This could be because of the higher risk perception in cross-border trade. Mitigating and correcting this perception is needed to enable us to be competent and competitive in the global market, trade finance plays a crucial role here, he mentioned.

“We have to focus and deliberate on enhancing the ease of obtaining finance, cost-effectiveness and competitive interests. The efficiency of the trade financing ecosystem will also play a key role. Development in digital technologies like AI and blockchain will provide leverages to reduce the cost of financing," he reiterated. 

Ateesh Kumar Singh, Joint Secretary, Ministry of MSME said that the trade industry is the one to power India's economy into a USD 5 trillion economy. 

"Internal trade and exports will be key drivers of economic growth. Trade is a truly diverse industry ranging from manufacturers, logistics service providers, labour agencies, warehousing, financing, insurers, regulators and even the government," Singh added. 

The Joint Secretary added that there is an ongoing bilateral FTA effort for obtaining new preferential market access. The interoperability of UPI and PayNow in Singapore is one such result of these efforts. Digitisation and digitalisation have changed how things are done now, new players have been added and processes rationalised.

Sanjeet Singh, Senior Adviser, Niti Aayog, said, “We are living in a world where trade and geopolitics are intrinsically intertwined. We are a part of the global economy and in fact a leading player of the global economy and we are affected by everything." 

Niti Aayog's Singh mentioned that recent global developments have resulted in a paradigm change in how trade is being conducted across the globe. Labour, gender, deforestation and sustainable development have become an important part of trade. India is fast becoming a party to a number of global alliances because of the recognition that India is a country which nobody can afford not to be doing business with. 

"In a world which is facing a global recession, we are still talking about 6 to 8 per cent growth. We are the fastest growing major economy in the world and soon going to become the 3rd largest global economy," he added.