Trade Policy Updates and Implications for India-China Ocean Freight

Updated on June 07, 2023

The foreign trade policy essentially consists of a list of rules for bringing in and taking out goods and services. These were implemented by the Directorate General of Foreign Trade (DGFT), which oversees the Ministry of Commerce and Industry's initiatives to promote and streamline exports and imports. The policy is in effect for a period of five years.

While the trade policy covers imports and exports, its primary objective is to facilitate trade by reducing transaction costs and time, making Indian exports more globally competitive. It aims to:

1. Accelerate economic activity and make the most of global market opportunities.
2. Encourage sustained economic growth by providing access to raw materials, components, intermediates (goods used as inputs for producing other goods), consumables and capital goods required for production.
3. Strengthen Indian agriculture, industry and services. 
4. Generate employment.
5. Provide quality consumer products at reasonable prices. 

As global trade continues to evolve, it is essential for nations to adapt to changes in trade policies and regulations. One such dynamic trade relationship exists between India and China, two economic powerhouses. This blog explores the latest trade policy updates and their implications for India-China ocean freight shipments.

Trade Policy Updates: An Overview: 

Trade policies support international trade, which controls imports and exports between nations. India and China have updated their policies over the past few years to deepen their economic ties and address new issues. These updates, including tariff modifications, customs rules, and trade agreements, have impacted the ocean freight market between China and India.

Sea Shipping from India to China: Trends and Challenges: 

Sea shipping is still a crucial mode of transportation for trade between China and India because of the great distance separating the two nations' locations.   

However, varying sea freight costs, port regulations, and customs procedures are just a few of the difficulties brought on by changing trade policies. To streamline logistics processes and guarantee prompt delivery, Indian exporters who wish to ship goods to China must keep up with these changes.

Sea Freight Cost to China: Factors Impacting Pricing: 

The sea freight cost significantly influences the viability and profitability of trade between India and China. A number of variables, such as fuel costs, vessel capacity, seasonal demand, and changes in trade policy, influence the price of shipping goods by sea. Businesses can better plan ahead for cost variations and decide on their shipping strategies when they know these factors.

Freight Shipping Routes: Optimizing Trade Efficiency:

Improving the two countries' bilateral trade depends on effective trade routes. Ocean freight shipments depend on the maritime route that links important Indian ports to Chinese ports. These routes might be modified due to adjustments to trade policies, which would affect transit times and costs. Business organizations can optimize their supply chains and reduce disruptions caused by transit by analyzing trade policies and their effects on shipping routes.

Container Shipping from India to China: Process and Challenges:

The foundation of ocean freight logistics is container shipping, which makes it possible for goods to be transported securely and effectively. Container shipping for trade between India and China entails a number of procedures, such as cargo consolidation, customs clearance, and cargo tracking. Exporters must stay informed and adjust their operations in response to changes in trade policy that may affect customs procedures and documentation needs.

Ocean Freight Shipping to China: Future Prospects: 

Geopolitical forces, developing technologies, and shifting trade policies all impact how ocean freight shipping between India and China will develop in the future. Both nations understand the significance of preserving strong trade relations despite ongoing difficulties like geopolitical tensions and environmental worries. The India-China ocean freight sector can get past its current challenges and open up fresh growth prospects by focusing on cooperation, infrastructure building, and policy harmonization. 

What are the expectations for FTP 2021-2026?

The effects of COVID-19 were disastrous for global trade. In April 2020, India's imports decreased by 59%, while exports fell by a record 60%. 

• The uncertainty surrounding MEIS and SEIS incentives necessitates the urgent need for WTO-compliant tax benefits. As a corrective measure, the government has announced the Remission of Duties or Taxes on Export Products (RoDTEP) scheme, which will take effect on January 1, 2021. It replaces MEIS.
• Credit access is something that exporters, especially MSMEs, have long desired. Due to the MSMEs' inadequate collateral, formal financial institutions like banks are reluctant to lend to them. 
• Infrastructure expansion: China's network of ports, highways, and high-speed trains, which are among the best in the world, is what makes it a manufacturing and exporting powerhouse.
• Tax breaks: Exporters in India would still require some type of government assistance even if subsidies were eliminated. Easier and lower taxes are a way of filling this gap. Long-standing requests include lowering corporate tax rates and streamlining tariff structures. 

Conclusion:

Changes in trade policy significantly impact ocean freight shipping between China and India. Businesses can navigate the dynamic trade environment by closely monitoring these updates and comprehending their implications. Trade between these two economic juggernauts will be made easier and more cost-effective by adjusting to changing trade policies, improving shipping routes, and streamlining container shipping procedures.

Businesses involved in international trade must comprehend the changing environment as it continues to change due to global trade dynamics. Explore the factors affecting sea freight costs, choose the best shipping routes, and learn about the opportunities and challenges associated with container shipping processes as you delve into the complexities of sea shipping from India to China. Maintaining smooth, affordable ocean freight shipments between India and China requires staying ahead of the curve and navigating the constantly evolving trade policies.