India’s exports may be battling its worst crisis in years, but a few sectors have stood out as bright spots.
Motor vehicles, pharmaceutical products, ready-made garments, handicrafts, spices, tea, coffee have helped India’s merchandise exports stay above the $250-billion mark.
Petroleum and jewellery exports, which have a majority share in India’s total export basket, imports a substantial chuck of the raw material used.
India imports 75% of its crude oil requirements, but also has one of the world’s largest refining capacities, enabling companies to export finished petroleum products.
Likewise, India imports about 1,000 tonnes of gold annually, second only to China, but is a large player of processed gems and jewellery.
The sharp plunge crude oil and other commodity prices have translated into lower unit costs of finished products, bringing down the value of such exported goods.
Among non-petroleum sectors, pharma products increased their share from 3.5% in 2013-14 to 5% in 2015-16 (till November 15) in India’s export basket. In value terms, exports rose 11.4%.
Export of ready-made garments grew 12.3% in 2014-15 and 2.4% in 2015-16 (till November 15) in value terms compared to the previous years. The segment currently has a 5.1% share in India’s export basket.
“Pharmaceutical exports being less elastic to economic slowdown could be a reason for its growth. Moreover, Incidentally, the US is the largest destination for India’s pharma exports (33% share) and also ready-made garments (21% share),” said DK Joshi, chief economist, CRISIL.
Handicrafts, spices, tea and coffee have also shown a healthy growth of 4.6%, though they don’t have a substantial share in overall exports. Another silver lining as far as India’s exports are concerned is services. India’s services export is showing positive growth -- from $56 billion in 2014-15 (April-November) to $96 billion in 2015-16 (April-November).
The numbers show that exporters have realised the importance of exploring new markets and products to counter the slowdown.
In 2000-01, the top five export destinations contributed 46% of total exports, compared to 34% in 2014-15.
However, on the products side, India still lags behind in terms of diversification. About 80% of our exports were contributed by as many as 25 items in 2000-01. The number has decreased to 20 in 2014-15.
“The share of petroleum products has declined from 21% in 2013-14 to 12% in the current fiscal (up to November), similarly petroleum, gems and jewellery together used to account for 34% of the export basket, which has declined to 27%. However, with decline in crude prices posing a problem, a diversified export basket can aid growth,” said Arvind Mehta, additional secretary in the commerce ministry.