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Unlocking economic growth: The role of trade finance discussed at ASSOCHAM summit

At the 4th National Summit Trade Finance for Inclusive Growth organised by ASSOCHAM, the state of global trade finance was discussed by industry leaders. One point came across clearly: the path to growing the Indian economy is easy access to trade finance. Deepesh Patel, TFG’s Editorial Director, recently joined the ASSOCHAM Trade Finance Steering committee, helping to provide insights into market activities and trends.

Shri Subhash Chandra Aggarwal Additional DGFT, Ministry of Commerce and Industry, GoI said, “The easy availability and cost of finance are important factors for export competitiveness. We have set a target of $2 trillion in exports, with equal contributions from goods and services by 2030. Trade is dependent on the availability of finance making the linkage a strong one. A robust and easy trade finance system is important for us to achieve the targeted export goals. 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 stated, “The new FTP 2023 released on 31st March focuses on key areas such as the liberalisation of merchanting trade, and we are hopeful that it will strengthen mercantile trading in the country. It has been observed that obtaining financing for cross-border trade is often perceived as more challenging compared to domestic trade. To enhance our competence and competitiveness in the global market, we need to address and rectify this risk perception. Trade finance plays a vital role in mitigating these challenges.”

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“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 reiterates.

Addressing the summit, Shri Ateesh Kumar Singh, Joint Secretary, Ministry of MSME, GoI believes that the trade industry holds the power to propel our economy towards a $5 trillion milestone. Internal trade and exports play a pivotal role in driving economic growth. With its diverse ecosystem encompassing manufacturers, logistics service providers, labor agencies, warehousing, financing, insurers, regulators, and even governmental entities, the trade industry contributes significantly to our nation’s prosperity.

Recognising its significance, the government is actively engaged in facilitating trade and addressing associated challenges. Substantial investments have been made to enhance both domestic and international trade through the development of physical infrastructure. Furthermore, ongoing bilateral Free Trade Agreement (FTA) negotiations aim to secure preferential market access for our exporters. The recent interoperability achievement between UPI and PayNow in Singapore exemplifies the outcomes of these collaborative efforts. Embracing digitisation and digitalisation, the trade industry has undergone a transformative shift, introducing new players and streamlining processes for enhanced efficiency.

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Shri 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 in the global economy and we are affected by everything. Bodies like ASSOCHAM should initiate discussions taking into consideration the new position in which India finds itself. Recent global developments have resulted in a paradigm change in how trade is 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 6-8% growth. We are the fastest growing major economy in the world and soon going to become the 3rd largest global economy.”

Delivering a special address at the summit, Dr Amiya Chandra, Additional DGFT, Ministry of Commerce and Industry, GoI said, “The G20 contributes 85% of the economy, 75% of world trade and 66% of the world population. International trade is the string that binds and holds the interconnected world, which is why the theme “One Earth, One Family, One Future”. It is our vision that by 2030, we take India’s share in global trade to 10% and exports to 25%. In services, we achieved 422 billion last year and in 2023 we have a 6.03% growth in exports. Overall exports are at 770.18 billion with 13% growth. ”

Delivering the theme address, Shri Madhav Nair, Co-Chairman, ASSOCHAM National Council for Banking & CEO & Country Head- India, Mashreq Bank, said “The new trend of financial inclusion with digital technology in commerce ad trade. There is a growing concern about rising interest rates and inflation and with constant conflicts and disruptions, there is a hindrance in the global supply value chain. This is a good opportunity for India to be a manufacturing hub to achieve the ambitions of global trade of 2 trillion by 2030.”

The summit also witnessed the launch of a report titled ‘Pathways to Inclusion,’ jointly produced by ASSOCHAM and Resurgent India. With the active participation of key players in the trade ecosystem, discussions revolved around topics such as ‘Advancing Trade Under India’s G20 Presidency & Powering Global Recovery,’ ‘New Foreign Trade Policy 2023: Evolving the Trade Landscape,’ and ‘Global Trade Financing Requirements.’ These discussions aimed to support the growth of the Indian trade industry.

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