As the globe slowly emerges from the financial crisis caused by the global pandemic, Indian organizations are preparing for a difficult year ahead. With the Indian economy experiencing the worst economic downturn, the vision for 2023 doesn’t look too optimistic.
Trade Tensions
The world has seen many changes in the last five years that have significantly impacted international trade among countries. The ongoing US-China trade tensions, US-India trade war, and Brexit have far-reaching implications for India’s exports. In 2018, the US imposed tariffs on $250 billion worth of Chinese goods. This was followed by India’s retaliatory tariff increase on 30 US products in June 2019.
This trade spat is creating an uncertain and unpredictable environment for businesses. Moreover, India has also been hit by the US withdrawal from the Paris Climate Agreement, which imposed carbon emissions restrictions. This could lead to higher costs for businesses that operate in the energy sector. (Read More: 2023 and Indian businesses (Part I))
In addition, the UK’s exit from the European Union is creating an additional layer of uncertainty. This could lead to new tariffs and restrictions on Indian exports, as well as complications in trade negotiations. All these factors make it increasingly more work for businesses to operate in the international market, leading to a decrease in exports and foreign investment.
The increasing trade tensions between India and its major trading partners are hurting businesses. Companies are facing higher costs due to tariffs and other restrictions on exports.
Furthermore, the uncertainty around Brexit and US-China trade war creates an unpredictable environment, making it difficult for companies to make long-term investments. Businesses must adjust their strategies accordingly to remain competitive in the global market.
Effect of Russia and Ukraine war on international trade
Russia’s invasion of Ukraine has developed a catastrophic humanitarian crisis that threatens geopolitical relations and stability. The war has heightened concerns about a sharp slowdown in global growth, a rise in debt & inflation, and an increase in poverty.
The economic impact of the conflict has rippled through vivid international channels, including financial and commodity markets, trade and migration relations, and trust. In studying the economic impact of the war, the reports of such organizations as the OECD, the World Trade Organization, the World Bank, the UN, the IMF, and UNCTAD were used. According to the reports, the conflict between Ukraine and Russia would affect the world economy through three main channels: Financial sanctions, an increase in commodity prices, and supply chain disruption.
Final Thought
In this series blog post, we took a deeper look at the challenges Indian businesses would face in the coming year and what you can do to prepare for them. So, if you are a company owner, you must have learned what you can do to help your business succeed in 2023.
This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.