TradeTech: How are emerging tech developments impacting global trade dynamics?

India’s foreign trade surged to a record USD849 billion in the first half of 2024, with merchandise exports growing by 5.41 per cent to USD230.51 billion.¹ Globally, according to the World Economic Forum, the volume of merchandise trade is projected to increase by 2.6 per cent in 2024.² While global trade trends are reversing, what role are new-age technologies playing in transforming trading patterns?

Today, enhancements in e-commerce and digital payments, along with the rapid integration of emerging technologies, such as AI, IoT and 5G, are empowering organisations and economies to navigate global disruptions. These technologies, collectively known as TechTrade, are reshaping the chain of movements of commodities, helping in building resilient global value chains.

1. First, cutting-edge technological tools are resolving several supply chain challenges through tech-augmented solutions of real-time prediction, demand forecast, sourcing and inventory management, thus addressing unforeseen disruptions efficiently. By 2025, 25 per cent of supply chain decisions are estimated to be made using AI-driven systems³
2. Second, digital trade tools can facilitate seamless information exchange, helping countries navigate through the complexities of trade compliance and international regulations. For instance, simply digitalising bills can save about USD6.5 billion in direct costs globally through reduced human error and faster document handling⁴
3. Third, according to the World Economic Forum, the trade finance gap globally is estimated to reach USD2.5 trillion by 2025⁵, preventing smaller companies, especially in developing economies, to access global trade opportunities. Technological solutions such as digital currencies and blockchain can address this issue by streamlining processes, de-risking cross-border payments and preventing fraud. This empowers smaller organisations, strengthens global value chains and adds to cross-border trade.

In my view, the advantages offered by these technologies are also driving enhanced R&D efforts. India, for instance, is becoming a major innovation hub, hosting over 1,600 GCCs.⁶ Our Global Innovation Index ranking has also increased from 81 in 2015 to 40 in 2023.⁷ However, while the trade landscape continues to embrace digitalisation, there will be an increased need for improved governance, robust cybersecurity measures and equitable access to these technologies for global trade to thrive and expand.

^[1] Half-Yearly Review of India’s Foreign Trade 2024, GTRI, 28 August 2024, accessed on 10 September 2024
^[2] Global Trade Growth Could More Than Double in 2024. Here’s Why, World Economic Forum, 14 May 2024, accessed on 10 September 2024
^[3] 25% of Supply Chain Decisions Will Be Made Across Intelligent Edge Ecosystems, Material Handling & Logistics, 25 January 2022, accessed on 10 September 2024
^[4] DCSA’s Member Carriers Commit to a Fully Standardised, Electronic Bill of Lading by 2030, Digital Container Shipping Association, 15 February 2023, accessed on 10 September 2024
^[5] Why Exporters Need to Mind the Trade Finance Gap, World Economic Forum, 10 February 2020, accessed on 10 September 2024
^[6] Global Capability Centres in India, IBEF, 19 September 2023, accessed on 10 September 2024
^[7] India Retains 40th Rank in the Global Innovation Index 2023, PIB, 28 September 2023, accessed on 10 September 2024