Affected by the spread of the COVID-19 epidemic and anti-globalization, India’s economic development will face many difficulties in 2020, industrial production growth will be weak, and domestic consumption and exports will decline significantly. Domestic conflicts intensified, the government pushed forward the agricultural reform bill, and farmers’ demonstrations broke out in many places. Attempts to decouple from China in trade, anti-dumping investigations against Chinese products have reached a record high, and relations between China and India are tense. In 2020, India fell into a quagmire of weak economic growth, and there is a long way to go to achieve the goal of rapid economic development.
1. India’s basic economic situation in 2020
Economic aggregate: According to According to data from the National Bureau of Statistics of India, India’s economic aggregate will reach US$1.87 trillion in the first three quarters of 2020. In the first three quarters, the actual decrease was 6% year-on-year. The Indian economy is expected to shrink by 7.7% in 2020.
Foreign exchange reserves: As of mid-December, India’s foreign exchange reserves reached US$578.6 billion; its gold reserves were approximately 673 tons.
GDP growth: Affected by the new crown epidemic, the Indian economy has declined sharply. The full-year GDP growth rate was -7%, the first contraction in more than 40 years since the 5.2% decline in the 1979-1980 fiscal year.
Exchange rate: The Indian rupee has depreciated significantly against the US dollar. At the beginning of the year, 1 US dollar was exchanged for 70.82 rupees; at the end of April, 1 US dollar was exchanged for 77.38 rupees; the annual average is 1 The US dollar exchange rate is around 74.50.
Import and export: From January to December 2020, India’s cumulative import and export total was US$642.96 billion, a year-on-year decrease of 20.43%. Among them, the cumulative exports were US$274.89 billion, a year-on-year decrease of 15.20%; the cumulative imports were US$368.07 billion, a year-on-year decrease of 23.93%; the cumulative trade deficit reached US$93.18 billion, a year-on-year decrease of 41.65%.
Unemployment rate: Affected by the new crown epidemic, a large number of people in India are unemployed. Data show that as of mid-December, India’s unemployment rate rose to 9.9%, the highest level in two years.
Oil consumption: According to data released by the Indian Ministry of Petroleum on January 9, India’s total oil consumption dropped by more than 10% in 2020, reaching 193.4 million tons. This is mainly due to the impact of the new crown epidemic, which has caused the demand for petroleum products in India, the world’s third largest oil importer and consumer, to shrink for the first time since 1999, falling to the lowest point in 20 years.
The COVID-19 epidemic continues to worsen: The COVID-19 epidemic is the biggest problem for India. India has a large population base and an underdeveloped economy. There are many slums in big cities such as Mumbai, New Delhi, Kolkata and Chennai. , medical resources are even scarcer, and once the epidemic gets out of control, the consequences will be disastrous. The COVID-19 epidemic in India has worsened rapidly in 2021. In April, the number of daily confirmed cases exceeded 400,000, and the number of deaths exceeded 200,000. The entire national medical system is facing severe pressure.
RCEP was signed, but India did not join the agreement: After 8 years, the Regional Comprehensive Economic Partnership Agreement (RCEP) was finally officially signed on November 15, 2020; marking the global coverage The free trade zone with the largest number of people, the largest scope, and the greatest potential for trade development was officially established. India, Asia’s third largest economy, has refused to join the agreement. Regarding why he did not join RCEP, Modi made it clear that the interests of the Indian people, especially the people at the bottom of society, must be taken into consideration. India is worried that a significant opening of its domestic market in the short term will have an impact on domestic industry. It is also worried that lower tariffs will have an impact on domestic manufacturing.
2. The operation of the Indian textile and apparel industry in 2020
The textile and apparel industry It plays a pivotal role in the Indian economy, ranking second among India’s exports of goods and contributing 12% to India’s foreign exchange earnings. India’s textile and apparel exports account for 5% of the world’s total exports.
Indian cotton production, import and export situation
2020/21 India’s cotton planting area is 13.3 million hectares, with an output of 35.85 million bales. Cotton export volume is expected to be 4.8 million bales (1 million tons), but due to the outbreak of the epidemic in the consumer market, the pace of export shipments is slow. Since October 2020, the spot price of cotton in India has increased by 13%. The shrinking global demand for cotton has intensified competition in cotton exports. The competition between Indian cotton, Brazilian cotton and Australian cotton has become more intense. As of December 25, 2020, India’s MSP cotton purchase volume reached a total of 5.26 million bales (1.14 million tons) worth US$2.66 billion. It is reported that the total MSP acquisition expenditure this year was US$4.72 billion. However, due to poor quality, the government Acquisition volumes may be limited.
Indian cotton yarn production and export situation
India is the world’s largest exporter of cotton yarn. In terms of varieties, yarn count 32-40 has the highest output, accounting for 30% of the total cotton yarn output. According to customs data, from August to October 2020, India exported 269,500 tons of cotton yarn, an increase of 28% year-on-year. Among them, Bangladesh, China, and Peru were the top three exporting countries, accounting for 25.5% respectively.�Universities give priority to subjects such as IT, biopharmaceuticals, engineering and business management, and enrollment in textile colleges is very tight. The government and enterprises have also invested insufficient funds in the training of textile talents. In the future, they will encounter difficulties such as a shortage of skilled industrial workers, which will inevitably weaken the international competitiveness of the Indian textile and garment industry.
China-India trade friction continues to increase. From the products India exports to China, it is not difficult to see that India’s manufacturing strength is still very limited. China can actually import not many manufactured products from India. However, India accuses China of not importing Indian products, resulting in huge import gaps with China. Export deficit. The different industrial structures of China and India show India’s obvious dependence on imported goods from China. Against the backdrop of India’s huge trade deficit with China, India has become one of the countries that has adopted the most stringent trade restrictions on Chinese imports in recent years.
India should strive to improve its productivity and international competitiveness, actively embrace globalization, and integrate into the global open market as soon as possible. In the long run, only by intensifying reforms and eliminating institutional and structural contradictions can the Indian economy be fundamentally boosted. </p
