Pushed by services, India set to cross $750bn in exports this year
The growth has been driven by services, although, in a significant achievement, India’s merchandise exports continue to grow despite global headwinds
Powered by services, India’s exports in the first 11 months of this financial year have already crossed 2021-22’s full year record number of around $672 billion, touching $702.88 billion according to the latest trade data. “We will exceed our target of $750 billion overall [goods and services] exports in FY23,” commerce secretary Sunil Barthwal said.
The growth has been driven by services, although, in a significant achievement, India’s merchandise exports continue to grow despite global headwinds. India’s cumulative goods exports grew 7.55% to $406 billion in first 11 months of the current financial year, Barthwal said, expressing confidence that the number will surpass the record $421.8 billion of merchandise exports in 2021-22, with a month remaining in this financial year.
Barthwal added that while merchandise exports were hit due to shrinking of global demand in the last three months, services have performed well. The war in Ukraine and a slowdown in western economies have hit global trade.
India’s merchandise exports dipped 8.8% (y-o-y) to $33.88 billion in February, contracting for the third month in a row, and imports fell by 8.21% to $51.31 billion, leading to a trade deficit of $17.43 billion, a year’s low, according to official trade data released on Wednesday. The country’s merchandise exports also dipped in December 2022 and January.
Commenting on the latest trade data, Barthwal said that achieving a positive merchandise exports growth of 7.55% in 2022-23 was not a small feat especially when the World Trade Organisation trimmed its global trade forecast to just 1%. In early October, WTO projected deceleration in global trade by 3.5% in 2022 and 1% in 2023. It said several factors were at play for the demand slump affecting different countries.
Experts said that despite a dip in merchandise exports in three consecutive months, India’s overall exports continue to grow.
Federation of Indian Export Organisations (FIEO) president A Sakthivel described the aggregate export of $703 billion recorded in the first 11 months of the current financial yearas “robust” in the current global scenario. “We expect to end 2022-23 with exports of $770-780 billion, which will be over $100 billion higher than aggregate exports of $672 billion recorded in 2021-22, exhibiting a high growth of 15-16%,” he added. Commerce minister Piyush Goyal on March 4 said that India’s merchandise and services exports could cross $750 billion in the current financial year surpassing the record exports achieved in 2021-22 .
The commerce secretary said India is set to post record exports in both goods and services, and that goods exports would have done even better but for global headwinds. “We have kept the momentum despite the global headwinds. Exporters have kept the momentum (going). Services exports are doing extremely well. Trade deficit has really come down,” he said.
The latest data showed a contraction of gold imports in April-February 2022-23 to $31.72 as compared to $45.12 billion in the same period last year. According to the data, other sectors that recorded a dip during the 11-month period of 2022-23 included engineering goods, cotton yarn, iron ore, plastic, and gems and jewellery.
Engineering exports dipped to $98.86 billion in April 2022-February 2023 from $101.15 billion in the same period last year. During this period, gems and jewellery exports declined to $35.21 billion from $35.32 billion in April-February of FY23. Petroleum products, chemicals, pharma, electronic goods, rice, and ready-made garments saw positive export growth.
Energy exports saw a rising trend in the year, as did exports of mobile phones from India, the commerce secretary said. India exported smart phones worth $8.3 billion by December in FY23.
Sakthivel said the overall performance of India’s overseas trade is excellent when seen in the “backdrop of global headwinds accentuated by geopolitical uncertainties, rising inflation, contraction in demand and high interest rates”. Many countries have shown sharp decline in their exports recently, he added.