Digitization of international trade could be an efficient way to reduce costs in trade and trade financing. In the coming years, all nations should endeavor to adopt enabling legislation to achieve paperless international trade.
These were the two major recommendations of the panelists at an international conference on cooperation on trade finance among the G20 member countries, organized by the ministry of commerce and industry on Tuesday in Mumbai. The event was hosted by the ECGC and India EXIM Bank on the sidelines of the 1st G20 Trade and Investment Working Group (TIWG) Meeting. Delegates from the member countries, industry, and academic experts from across the world were present at the conference to engage in constructive dialogue and exchange of ideas in the domain of trade finance.
Sunil Barthwal, Commerce Secretary, in his keynote address, highlighted that it is the right time to discuss the issues facing trade finance and possible solutions. The universal message from all the speakers at the conference highlighted the necessity of trade for ensuring prosperity for all and that inclusive trade finance is key to achieving this target. The challenges to be addressed in digitalizing trade were identified as international cooperation in harmonizing definitions, standards, and data sharing across borders digitally.
Two-panel discussions were organized as part of the event consisting of international experts. The first panel discussed the role of banks, financial institutions, development finance institutions, and Export Credit Agencies to identify the gaps and address the challenges in the trade finance arena amidst the uncertain global trade landscape. The second panel focused on accelerating digitalization and fintech solutions for improving access to trade finance. The session also delved into the current and emerging fintech technologies for making more customized lending decisions and enhancing trade finance supply for MSMEs.
While estimates suggest that the traditional trade finance gap is currently around USD 2 trillion, bridging the gap needs more players, including multilateral development banks and Export Credit Agencies (ECAs) to increase their participation. The evolution of fintechs and account aggregators in the ecosystem enables transaction risk evaluation based on real-time data. This will enable cost-effective appraisal by trade finance providers.
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