The Commerce and Industry Ministry disputed a recent report by the United Nations Conference on Trade and Development (UNCTAD), which indicated a rise in India's trade reliance on China and the EU in 2023.

According to the ministry, India's imports from China saw a 3% decrease in the calendar year 2023 compared to 2022, while exports to both China and the EU increased by 7.1% and 2.1%, respectively, during the same period.

In its Global Trade Update released on March 22, the United Nations Conference on Trade and Development reported that India's trade reliance on the European Union and China is increasing. This shift in global trade dynamics has occurred over the past two years, with trade patterns undergoing restructuring along geopolitical lines.

In its Global Trade Update released on March 22, the United Nations Conference on Trade and Development reported that India's trade reliance on the European Union and China is increasing. This shift in global trade dynamics has occurred over the past two years, with trade patterns undergoing restructuring along geopolitical lines.

The report underscores a notable transformation in global supply chains, attributed to the repercussions of the COVID-19 pandemic and the conflict between Ukraine and Russia. This upheaval has led to a surge in prices for essential commodities such as food and fuel.

Furthermore, the report highlights a recent trend observed since late 2022, where there has been an increase in political alignment among trading partners, favouring countries with similar geopolitical stances. This trend, termed as "friend-shoring," has contributed to a closer proximity in trade relations.

Moreover, there has been a discernible consolidation of global trade towards major trade partnerships. However, the intensity of this consolidation has moderated in the last quarter of 2023.

The conflict has prompted Russia to strengthen its ties with China, resulting in a more than 7.1 percent increase in its dependence on the latter, primarily due to heightened oil imports. Conversely, Ukraine's reliance on the EU has grown by 5.8 percent, while Russia's dependence has decreased by 5.3 percent.

In contrast, the US experienced a slight decrease in its dependency on China by 1.2 percent. Conversely, the UK saw a notable rise in its reliance on the EU by 1.6 percent.

Most sectors experienced a decrease in trade, with the exception of pharmaceuticals, transportation equipment, and road vehicles, particularly driven by the sale of electric vehicles.

The report underscores a consistent decline in the value of global merchandise trade since mid-2022, although trade in services continued to grow during this period. Overall, the global trade update forecasts that global trade in 2023 will amount to approximately $31 trillion, representing a contraction of nearly $1 trillion compared to the record high of 2022.

Image source: Economic Times