Strong trade ties boosting India’s export market share: Economic Survey

India's global exports of goods and services have increased, with merchandise exports growing by 0.15% and services reaching $341.1 billion in FY24.

India is gaining market share in global exports of merchandise and services, benefiting from its strong trade relations across countries, which raised its share in global goods exports to 1.8% and services to 4.3% in FY24 as compared to an average of 1.7% and 3.3% respectively during FY16-FY20, the economic survey said on Monday.

It said that the IFSC GIFT City in Gujarat has emerged as a dominant gateway for global capital inflows into India. (Reuters)

While moderation in merchandise exports continued during FY24 mainly on account of weaker global demand and persistent geopolitical tensions, India’s service exports have remained robust, reaching a new high of $341.1 billion in FY24, it said. “The exports (merchandise and services) in FY24 grew by 0.15%, while the total imports declined by 4.9%,” it said.

It attributed policy measures for resilience of India’s exports both in goods and services. The government took various measures to promote exports and reduce logistics costs involved in international trade, which included setting export targets and their monitoring, provision of export credit insurance services and encouraging banks to provide affordable and adequate export credit to micro, small and medium enterprises (MSME) exporters, enabling them to explore new markets and diversify their existing products competitively, it said.

India’s overall exports (both merchandise and services) have been growing on a “secular basis” since FY17 for almost three years. The trend was halted after the outbreak of the pandemic in FY20; however, FY22 marked a significant turnaround, it said. The positive momentum extended into FY23, with India’s overall exports crossing $776 billion. Overall imports also increased to $898 billion in FY23 compared to $760.1 billion in FY22. Despite persistent global challenges, overall exports in FY24 surpassed the FY23 record, growing by 0.23%, and overall imports in FY24 declined by 4.9% despite robust domestic demand, it said.

During the first two months of FY25, overall exports increased to $133.6 billion, compared to $122.4 billion in the corresponding period of the previous year. During the same time period, overall imports also increased from $136.4 billion to $149.9 billion, leading to a widening of the overall trade deficit from $14 billion to $16.3 billion, the survey said.

The share of India’s services exports in world services exports rose from 0.5% in 1993 to 4.3% in 2022, it said. “India is now the seventh-largest services exporting country globally rising phenomenally from its 24th position in 2001,” it said.

Amongst services exports, software, IT services and business services exports have increased. This was supported by India emerging as a hub for Global Capability Centres (GCCs). India ranks 2nd in the world in telecommunication, computer, and information services exports, 6th in personal, cultural and recreational services exports and 8th in other business services exports, it said.

According to the survey, the production linked incentive (PLI) schemes helped in increasing exports of goods such as mobile phones and electronics items. It, however, cautioned that global fluctuations in commodity prices such as oil, metals, and agricultural products could increase India’s value of imports.

The survey highlighted that India’s current account deficit (CAD) narrowed to $23.2 billion (0.7% of GDP) in FY24 from $67 billion (2% of GDP) during the previous year due to a decline in merchandise trade deficit, rising net services exports and increasing remittances.

It said that the IFSC GIFT City in Gujarat has emerged as a dominant gateway for global capital inflows into India. The GIFT City is envisaged to be a unique international financial jurisdiction located inside onshore India, set up with a dual objective of onshoring India-centric international financial services business as well as serving as a preferred gateway for channelising global capital flows into and out of the country. The contribution of GIFT IFSC in transforming the country’s financial industry landscape can be better appreciated by looking at some key business activities in GIFT IFSC, it said, citing examples of the banking sector, fund industry, foreign universities, and aircraft and ship leasing and financing.