India-US Trade Growth To Undergo a Paradigm Shift

The apparel and gems, and jewelry sector will likely face a setback in the upcoming periods following the recessionary trends.               

The merchandise trade between India and the United States has grown to nearly 25 percent in October 2022, per US Census Bureau data reports. Yet, this positive impact could face a setback in the forthcoming months due to the recessionary trends that are likely to evolve and less demand in markets like the US. That is, the US Census data reveals that the India-US merchandise trade attained a paramount value of 134.148 billion in October 20222, deliberately indicating an upsurge of 24.87 percent at the estimation period.

Simultaneously, the apparel industry of India, with an established key export market like the US, has likely experienced a 16 percent contraction in exports. The traditional markets of Indian RMG (ready-made garments), like the UK, the EU, and the USA, are critically facing recession and global headwinds. As a result, a shrink in demand on one-side buyers for a nearly 15 percent discount rate over the other is witnessed in recent times, briefs Mr. Narendra Goenks, chairman of the Apparel Export Promotion Council (AEPC).

In the Q1 and early Q2 periods of 2022, the India-US goods trade experienced a critical upsurge by 40 percent, with the top Indian export driving the surge encompassing gems and jewelry. Yet, the sector is highly anticipated to face a significant global downturn in the upcoming years owing to the recessionary trends. Hence, Mr. Colin Shah, managing director of Kama Jewellery and former chairman of the Gem and Jewellery Export Promotion Council of India (GJEPC), remarks that the Indian exporters, unlike the pre-annual periods, will experience little growth in the sector, especially in the US.

Therefore, retail sales, alongside, will experience an immense setback by five to ten percent in the upcoming period, with a hope to bounce back in Q3 2023. Irrespective of the demands of the festive season, the sector will undergo a paradigm transformation within markets, especially apparel, gems, and jewelry goods.

Wherein the DG and CEO of the Federation of Indian Export Organisation (FIEO), Ajay Sahai, notes that the soaring inflation rate and decreased purchasing power have highly impacted the demand in the US. That is, the need for these products has likely faced a deduction because of the increased inflation in the United States, which critically affects purchasing power. Departmental stores have begun maintaining lean inventories to cope with the hike in interest rates of the building inventories costs. FIEO is the apex body of the government-recognized export councils, commodity boards, and export development authorities within India.

Hence, the US Federal Reserve is aiming to increase the interest rates by sending ripples through the global economy, for an efficient tackling of inflation and accelerated commodity prices, on account of the prevailing international conflicts. The US Federal Open Market Committee (FOMC) meeting is anticipated to raise the interest rates in America for a seventh consecutive period.