Targeting $1 Trillion in Goods Exports by 2030: Initiatives and Challenges
- April 26, 2024
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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Targeting $1 Trillion in Goods Exports by 2030: Initiatives and Challenges
Subject: Economy
Sec: External sector
- Objective: The Ministry of Trade has set a target to achieve $1 trillion in merchandise exports by 2030.
- Initiative: An exercise has been initiated to identify the necessary infrastructure requirements, potential sectors, and clusters that will contribute to achieving this target.
- Sustainability Concerns: Sustainability has emerged as a major concern, especially after the European Parliament’s approval of the Corporate Sustainability Due Diligence Directive (CSDDD). This law requires larger companies operating in the EU to ensure their supply chains do not involve forced labor or environmental damage.
- Impact of CSDDD: Prior to CSDDD, the European Union implemented the Carbon Border Adjustment Mechanism (CBAM), which penalizes products with high carbon footprints entering the EU. This could raise the costs of Indian exports by 20 to 35 percent, particularly affecting iron, steel, and aluminum exports to the EU.
- Infrastructure Enhancement: The Ministry is focusing on enhancing infrastructure capabilities, including ports, airports, and railways, to support increased trade volumes. A study by the Asian Development Bank is underway to identify critical clusters and infrastructure gaps.
- Integration into Global Supply Chains (GVCs): There is an emphasis on integrating India into global supply chains, as approximately 70 percent of global trade occurs through these chains.
- Infrastructure Challenges: Significant infrastructure development is required to support the projected increase in goods movement. This includes additional capacity in ports, railways, and airports to handle the expected rise in exports and imports.
Overall, while the target of $1 trillion in merchandise exports by 2030 presents significant challenges, officials are optimistic about overcoming them through strategic infrastructure development and integration into global supply chains.
About Carbon Border Adjustment Mechanism (CBAM)
- What is it? CBAM is a proposed European Union (EU) tariff on carbon-intensive products.
- Purpose: The purpose of CBAM is to put a fair price on the carbon emitted during the production of carbon-intensive goods entering the EU. It aims to encourage cleaner industrial production in non-EU countries.
- Adoption and Transition Period: CBAM was adopted on May 17, 2023, and its transitional period started on October 1, 2023.
- Operation: CBAM is designed to counter the risk of carbon leakage by imposing a charge on the embedded carbon content of certain imports equal to the carbon price of domestic production.
- How does it Work?
- EU importers must purchase carbon certificates corresponding to the EU’s carbon price if the goods had been produced locally.
- Certificate prices are calculated based on auction prices in the EU carbon credit market.
- The required certificates depend on the quantity of imported goods and their embedded emissions.
- Companies from countries with equivalent domestic carbon pricing regimes can export to the EU without buying CBAM certificates.
- Affected Sectors: Initially, CBAM targets goods imported from non-EU countries, particularly those in carbon-intensive sectors such as cement, electricity, fertilisers, aluminium, iron, steel, and hydrogen.
About Directive on Corporate Sustainability Due Diligence (CSDC):
- Introduction: The European Commission has proposed a Directive on Corporate Sustainability Due Diligence to promote sustainable and responsible corporate behavior across global value chains.
- Key Features:
- It mandates certain large EU and non-EU companies to establish mandatory due diligence practices to identify, prevent, mitigate, and ultimately terminate adverse impacts of their corporate activities on human rights and the environment.
- The proposal aligns with the European Green Deal’s objectives towards a sustainable future.
- Impacts of EU’s Sustainability:
- Covered EU companies are taking proactive measures to protect themselves, including implementing robust mechanisms to mitigate risks.
- Actions include establishing clear contractual clauses, complaint procedures, increased third-party assessments, and capacity building.