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Identification of ESGs - The Key Issue Emerging Challenges for India

Identification of ESGs - The Key Issue Emerging Challenges for India. S. K. Mohanty Senior Fellow, RIS. Trade and Climate Change in Emerging Economies The Competitiveness, Technology and IPR Dimensions RIS and ICTSD March 30-31, 2010 New Delhi. Scheme of the Presentation.

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Identification of ESGs - The Key Issue Emerging Challenges for India

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  1. Identification of ESGs - The Key IssueEmerging Challenges for India S. K. Mohanty Senior Fellow, RIS Trade and Climate Change in Emerging Economies The Competitiveness, Technology and IPR Dimensions RIS and ICTSD March 30-31, 2010 New Delhi

  2. Scheme of the Presentation • Trade policy consistent with the sustainable growth • Identification of Environmentally Sensitive Goods (ESG) • APEC and OECD lists • Alternative approach to identify ESGs • Relevance of these products for the global and domestic trade sector

  3. Background • Trade policy supports growth oriented development policy • India followed ELG and DDLG approaches simultaneously • External sector a major contributor to domestic growth • India’s concern for climate change issues • ‘Pollution haven hypothesis’- World Bank in the 1990s • Work on Environmentally Sensitive Goods – late 1990s • Alternative Approach to Identify ESGs • Relevance of ESG trade for India • Magnitude of Indian trade in ESGs • Coverage of ESGs • Trade Protection: TBs Vrs NTBs (Mohanty & Manoharan, 2002) • Trade opportunities in the region (Mohanty & Chaturvedi, 2006)

  4. Key Issues in ESGs • How to identify ESGs? • Growing consumer expectations for ‘green products’ • Volume of global trade in ESGs • Size of the ESG market in India • Technology intensity of ESGs • Implications for the domestic employment

  5. Definition of ESG: Alternative Approach • ESG lists: APEC, OECD, India, etc. • Emerging gaps between theory and Practice • Entire industry can not be attributed as environmentally Sensitive – World Bank Study • Classification to be based on current practices • Negotiation Requirements: Production and trade classification (ISIC/HS) • Alternative Approach • Developed countries: sensitive to environment • - Environmentally Sensitive Measures base on scientific developments • - Assumption: approach of developed countries • UNCTAD database • Comprehensive list based on ES NTBs in six DCs/Reg

  6. Number of ESG products

  7. Technology Intensity of ESGs in different Lists Trade and technology concordance (Mohanty, 2003)

  8. Structure of Globally Traded ESGs • Structure of Trade in ESGs • Agricultural sector • live animals and vegetables • Industrial sector: Main sectors - Chemicals & auto sectors • Other sectors: Fats and oils, prepared food, wood products, machinery, etc • Incidence of multiple NTMs • Protection using other instruments: Specific tariff, peak tariff, etc.

  9. Trends in Global ESG Exports

  10. Composition of Global ESGs Exports: RIS List

  11. ESG Trade in India • ESG exports form large part of total Exports • Constant market share but growing at 21.6% CAGR • Certain sectors are affected more than others • Significant impact on employment

  12. Size of ESG Exports in India: RIS List (Mil US$)

  13. Sectoral Composition of ESGs in Indian Exports (US $ Mn.)

  14. Employment Effects of ESGs in Manufacturing Sector: Distribution across Sectoral

  15. Employment effects of ESGs in Manufacturing Sector: Share of Direct Employment in Total

  16. Summing Up • Need for a comprehensive definition and identification of ESGs • ESGs lists prepared by APEC and OECD - not complete • RIS list could be an alternative one • Trend in Global exports of ESGs – Growing fast and sharing more than 20% of global exports • ESGs covering large part of the agriculture and selected sub-sectors of the manufacturing sector • India’s exports of ESGs – lower than global average • Critically affected sectors- Fruits & Vegetables, Chemicals & auto • Employment will be affected in various tech-intensive sectors

  17. Thank you 16

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