At a time when the World Trade Organisation has downgraded the global trade forecast from 4% to 3.3% for 2015, exports to Hong Kong could play a key role in fulfilling India’s ambitious aim to double outbound shipments to $900 billion over the next five years.
With nearly 25 years since India unveiled the Look East policy for building strategic and economic relations with its neighbours, Hong Kong has emerged as the next big opportunity for exports. It is now not merely an entrepot or trade centre, but a consumer as well.
According to the commerce ministry, the country has jumped two ranks up in just five years, and is now the third-largest market for Indian exports, after the US and UAE. Exports to Hong Kong jumped to $10.96 billion in April 2014-January 2015 from $6.65 billion in 2008-09.
Analysts estimate that 30% of exports to Hong Kong (led by gems, jewellery and leather products) are locally consumed. The rest is shipped to China, but majority of it comes back to Hong Kong as value-added goods.
“It would be interesting to see the impact of this changing trade architecture, where the traditional markets account for 30% and emerging markets add up to 56%,” said Himanshu Tewari, partner, BMR & Associates LLP.
“Another hidden silver lining is the fact that the exports (to Hong Kong) help counter India’s trade deficit ($40 billion) with China,” said Ajay Sahai, director-general and CEO of Federation of Indian Export Organisations (FIEO).