The $300 billion mark was reached in FY 2012 ($306 billion) and thus India took nearly a decade to add an additional $100 billion in exports, according to a report by the SBI.
Merchandise exports crossed the $400 billion mark nine days earlier than expected, beating the government’s target by about 5% and recording 44% growth from a year earlier. Despite challenges posed by successive waves of Covid-19, India’s merchandise exports remained above $30 billion for eleven consecutive months from April to February, with December 2021 in particular having recorded monthly merchandise exports the highest on record, at $39.3 billion.
Various factors have contributed to this success:
• Exports of finished or intermediate products; India was no longer a commodity exporter
• Massive boost to the production-linked incentive scheme
• High commodity and food prices for several years
India’s exports of goods and services as a percentage of GDP were 3.7% in 1970 and 6.1% in 1980, but peaked in 2013 (25.4%). From there, they have steadily slowed to 2020 (18.7%) reflecting the global trend. In FY22, the share of exports in GDP has already exceeded 20.8%: with a growth rate of 18%, the share could peak again in FY26, the SBI noted.
India’s services exports are expected to reach $245 billion in FY22. The share of services exports in total exports has increased steadily from 27% in FY2001 to 41% in FY22. in FY2021, but moderated to 37% in FY22, reflecting pandemic-induced disruptions.
“We are revising the previous target of $300 billion to $350 billion for FY23 services exports. The target is set taking into account sectors that have failed to perform in the last 2 years due to the pandemic and will hopefully rebound in FY23 such as travel and tourism, hospitality, education and entertainment. market research, consultancy, engineering and construction and will contribute to the $300 billion target for FY23,” said Dr. Abhay Sinha. , – Deputy Director General, Export Promotion Board of services.
Who are India’s main trading partners?
Data for the past 25 years shows that out of India’s top 10 export partners, 6 remain the same over the period. While the United States has remained India’s largest trading partner since FY 1998, its share increased to 20.9% in FY 2001 from 19.4% in FY 2001. FY98. However, it dropped again to 18.1% for FY22. Meanwhile, our exports increased to Bangladesh, China, Singapore and even the Netherlands! Moreover, in recent years, Japan, Italy, Russia and France have been replaced by China, Bangladesh, the Netherlands and Singapore. India’s exports have become more oriented towards South-South trade.
Until FY2000, few developing countries were among our export destinations. Even China has not found its place in our top 10 export destinations. Even in FY 2001, China emerged as India’s 15th largest export destination with a share of less than 2% of total exports. However, in FY22, it occupies a 5.2% share of Indian exports.
Interestingly, the concentration of the top 10 countries in India’s export basket has declined over the years and the share of the others has increased, implying a diversification of export destinations.
What do we export?
India’s top 15 exports accounted for more than 72% of India’s total exports in the April-February 22 financial year.
Many of these products showed higher export growth not only compared to the same period of FY21, but also compared to the corresponding periods of FY20 and FY19
India’s imports also increased significantly, by around 55% year-on-year in FY22 to reach $610 billion.
The SBI estimated the price and quantity effect of the change in value in FY22 (through February) over the same period in FY21: the total value of these products increased by more than of 76%, and it is interesting to note that only 26% is the quantity effect and the remaining 74% is the price effect.
The higher value of crude oil and petroleum product imports in FY22 is mainly due to higher prices.
India’s agricultural exports also hit a new high in FY22
India’s consistent efforts to introduce reforms aimed at boosting agricultural exports have been successful and are now yielding results. India’s agricultural exports have grown remarkably despite COVID-19 and crossed the $50 billion mark in FY22.
What led to this export growth?
The main sectors in which the PLI scheme has been introduced are automobiles, food products, special steel, pharmaceuticals, electronics/technology products, textiles and aviation. Thus, the PLI program has benefited many of the top 15 commodity exports, particularly mobile and electronic goods, medicines and pharmaceuticals.
Additionally, the government is pushing for new free trade agreements and trade concessions with major economies and regional blocs in a bid to boost export-oriented domestic manufacturing as it pursues an export target. ambitious US$450-500 billion in FY23.
This calendar year, India has already signed FTAs with the United Arab Emirates and Australia, while another trade pact with the UK is likely with British Prime Minister Boris Johnson’s visit to India this week. The growing list of countries and regional blocs negotiating trade deals with India includes the UK, Russia, Canada, the GCC and the Southern African Customs Union.
India wants ASEAN countries to lower market restrictions in the agriculture and auto sectors and reciprocate its own FTA concessions.
The India-Australia ECTA will provide duty-free access to the bulk of Indian exports to Australia (96%), including engineered goods, gems and jewellery, textiles and apparel, leather, etc After five years, this will be extended to 100% Indian goods.
With the UAE pact, major Indian exports to the UAE such as refined petroleum products, minerals, grains, sugar, fruits, vegetables, tea, meat, seafood, textiles, l engineering, mechanical products and chemicals will benefit.
CEPA with UAE eliminates tariffs on 90% of India’s reduced value exports to UAE, covering sectors such as gemstones and jewellery, textiles, leather and engineering products.
The main objective of an FTP is to facilitate exchanges by reducing the cost and time of transaction. It aims to work with state governments to implement “district export centers” that will help meet each state’s export goals.