Why is it that despite the massive “anti-Pakistan” emotional outburst that swept through India, we actually bought more Made in Pakistan merchandise in 2016 compared to a year back?

Steven Philip Warner | July 2017 Issue | The Dollar Business


Sometimes, maturity is harder to achieve than simply, growing up. And for something that exerts overwhelming influence on a nation's internal and external policy and trade decisions like ‘exports’, this is an easy possibility. Clearly, the absence of reality-checks coupled with continued adherence to blind emotions are to be blamed. 

The absence of a reality check transpires in many ways, affecting India’s performance in trade and foreign policy matters. Imagine, how we still can’t get over even an old-fashion institutionalised notion like BRICS. Reasons – emotional attachment to pride and lack of reality checks. Really, BRICS is defunct and the influence the bloc had imagined it would have on world trade turned out just a wish. Shouldn’t India break the mould and get over the emotional attachment with the bloc? The manner in which BRICS has shown lowered activity in exports and imports is symbolic of a group gone pale - a shadow of what was imagined – when it comes to economic progress and individual prosperity. The value of exports and imports by the BRICS in CY2016 was lower compared to what was achieved even six long years back!

Brittle emotional attachments to old-fashion institutionalised notions need to be dumped if a nation is to excel in foreign trade. What has been happening for the past many months is proof. We’ve been celebrating rising export numbers each month. But little do we realise that in almost a third of product categories (HS code chapter level) our share of world trade has dipped in the past five years! Reality check is important, lest we get swayed away by emotions.

India’s exports has challenges and even in traditional export destinations. Let me pinpoint two regions that account for up to a quarter of India’s exports – Middle-East and North Africa. Middle-East has for long played the safety valve to an extent for Indian exports. The Gulf economies are now moving up various industrial value chains, and while this means a fall in remittances with lesser dependence on lower-skilled Indian workers, the region may even start importing less of manufactured goods and more of just raw, low-value materials in years to come. North Africa, which in recent years has absorbed a considerable proportion of India’s exports has its headaches too. The oncoming surge in the count of young Africans (100 million-plus) entering the job market by 2025 is a problem; really, the region has insufficient economic activity or infrastructure to support the influx. Result – by 2025, it could fall sharply in terms of it being a sizeable market for Indian exporters. Emotionally, we could stick to these two regions. Logically, it makes sense to hunt for greener pastures, or even switch to erstwhile popular markets like EU (which has seen quite a quick revival since the second half of 2016).

Emotions don’t drive foreign trade. If that was the case, why is it that despite a “boycott Chinese imports” sentimental wave that swept through India in October last, the average monthly imports from China has actually risen? Why is it that despite the massive “anti-Pakistan” emotional outburst that swept through India, we actually bought more Made in Pakistan merchandise in 2016 as compared to a year back? (Why is it that after the Kargil War that gave rise to only bitter emotions, our annual purchases from Pakistan have increased by almost 600%?) Something delicate here – do you recall the anti-beef consumption and anti-cow slaughter movements that have forever been in vogue? Here’s to your knowledge – India is the largest exporter of bovine meat in the world – it commands about 20% of the world supply annually. Surprising? Well, foreign trade knows no emotions!

Moral of the story – Get over old-fashioned notions, stop guessing and imagining without reality-checks, and let go of emotions when it comes to cross-border trade. Do these and your export numbers will tick. Out on the rough seas, where rules and policies of governments change each day, sanctions and regulations come alive without much reason, and sourcing strategies are ever so dynamic, it’s forever been mind over heart. And that forever will remain.