The slowdown in India’s economy is due to several factors, including the weakening of the rupee against the dollar and the depreciation of its manufacturing exports.
But the slowdown in exports, which has been blamed on a combination of low-skilled labour, the rise of private sector firms in manufacturing and low interest rates, has led to the rise in unemployment and poverty.
As the trade slowdown intensifies, there is a risk that India will become a global outlier in the next decade, with the United States and Japan, two of the world’s largest economies, emerging as major trading partners.
The Trade Stabilisation Committee, the body that oversees the global trade policy, said in its annual report on Monday that it expects India’s trade to decline by 7% in 2018, from $7.8 trillion in 2016.
India has been losing its export lead to China, which is the world leader in goods exports.
It is expected to be the second-largest export market for China next year, after the United Kingdom.
The US is also set to overtake India as the world centre of foreign direct investment.
The report said the trend of China’s growth is expected in 2020, and that the country’s exports to the US will drop to $3.8 billion in 2020 from $4.5 billion in 2016, the first decline in three years.
“The Indian economy is undergoing rapid change, which will require more structural reforms to make it more competitive with the global economy,” the committee said.
“India is in the process of transforming itself to a competitive business environment and a more globalised economy.”
In the past decade, India has undergone a series of political changes, which have led to a slowdown in the economy.
The last time the Indian economy shrank was in 2008, and it has been contracting for three years now.
In January, the finance ministry said that India would not meet its trade targets until 2019, and warned of the dangers of further fiscal adjustment.
The government has also started cutting public sector salaries, and a survey of employees showed that many were worried about their future.
“I am worried that India is going to lose its market share and the opportunities it has,” said Rupa Khandelwal, a teacher and a student at a college in Mumbai.
India, a global economic power, has become a world leader after years of political unrest.
Since 2010, protests have taken place against corruption and the slow pace of reforms, as well as against high unemployment, rampant poverty and rising inequality.