India Set to Transform Global Trade with 6.4% CAGR Over the Next Decade: Analysis
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New Delhi, Jan 13 (NationPress) India is on the brink of transforming its involvement in global trade, forecasting a compound annual growth rate (CAGR) of 6.4% in trade for the next decade, which corresponds roughly to its impressive GDP growth, as highlighted in a report issued on Monday.
The ASEAN region, particularly India, stands to gain significantly from production relocations driven by geopolitical factors, such as the trade frictions between the US and China.
"Our projections indicate a 6.4% CAGR in India’s overall trade by 2033, reaching $1.8 trillion annually, which aligns closely with its substantial GDP growth," stated the report from Boston Consulting Group (BCG).
As the global economy shifts towards more resilient and diversified supply chains, India’s 'China+1' strategy, bolstered by its vast domestic market, skilled labor force, and progressive policies, positions the nation as a favored global manufacturing center.
“Enhancing collaborations with the US, EU, and emerging markets like Africa and ASEAN will be crucial for India to leverage this momentum and promote inclusive, sustainable growth in global trade,” remarked Nishant Gupta, Managing Director Partner at BCG India.
India is becoming a significant narrative in the Global South as it seeks favorable ties with many of the world’s leading economies.
Key factors driving this will include India’s rising status as a manufacturing base for companies aiming to diversify their supply chains away from China, substantial government incentives for manufacturing, a large low-cost workforce, and rapidly enhancing infrastructure, the report detailed.
The analysis from BCG’s Center for Geopolitics anticipates that global trade will exceed $29 trillion by 2033, yet the paths taken by these goods are evolving swiftly. The Global South, which constitutes approximately 30% of global trade, is expected to undergo several significant changes in the next decade.
Geopolitical tensions, alliances, and ambitions are reshaping the global economy — a trend expected to persist, intensified by the US's implementation of tariffs on foreign imports, the report noted.
Without a widespread escalation in tariffs, global trade in goods is projected to expand at an average rate of 2.9% per year over the next eight years, but the channels through which goods are transported will undergo substantial changes as North America diminishes its reliance on China and China strengthens its ties with the Global South, thereby solidifying its influence on the global trade stage.
“Trade routes have already begun shifting from traditional patterns, and impending US tariffs will accelerate this transition. Understanding these new dynamics will be essential for any global enterprise,” said Aparna Bharadwaj, managing director and partner at BCG, who leads the Global Advantage practice.
When considering product categories imported by the US, the most significant effects will be observed in imported auto parts and vehicles, primarily impacting trade relations with Mexico, the EU, and Japan.
Consumer electronics, electrical machinery, and fashion items would face the greatest repercussions from increased tariffs on Chinese products.
“Our estimates suggest that a 60% tariff rate could increase the costs of importing consumer electronics from China into the US by $61 billion,” stated the report.
