Surge in Exports: $400 Billion Target Achieved
STORIES, ANALYSES, EXPERT VIEWS
India has achieved the ambitious target of $400 billion of goods exports nine days ahead of schedule with Prime Minister Narendra Modi Wednesday lauding farmers, weavers, MSMEs, manufacturers and exporters for their contribution in achieving the feat.
In a tweet, the PM said; “India set an ambitious target of $400 Billion of goods exports & achieves this target for the first time ever. I congratulate our farmers, weavers, MSMEs, manufacturers, exporters for this success.”
“Local Goes Global,” he said, describing the development as a key milestone in India’s ‘Aatmanirbhar Bharat’ (self sufficient India) journey.
Commerce and Industry Minister Piyush Goyal had in February informed the Lok Sabha that for the 10th month in a row, April 2021 to January 2022, India posted over $30 billion of exports. “It is a record, we have already crossed $334 billion of exports which is more than the highest ever that India has done in a full 12 months period. We are well on track to achieve $400 billion of exports,” he had said.
It is expected that exports will reach $410 billion by the end of March.
This is the first time ever that exports have crossed the $400 billion-mark. The previous best was $331.02 billion that was achieved in 2018-19. India added around $25.19 billion worth exports in the month of March so far and may finish at about $410 billion by the end of this fiscal.
Surge in merchandise exports
According to data released by the ministry of commerce & industry on March 14, India’s merchandise exports for the period April-February 2021-22 stood at $374.81 billion as against $256.55 billion during the period April-February 2020-21, registering a growth of 46.09 per cent.
In February 2022, merchandise exports surged to $34.57 billion, registering a year-on-year growth of 25.1 per cent.
The sector was one of the very few to revert quickly to pre-pandemic levels once the government started relaxing Covid-related curbs. In spite of the devastating second wave of Covid-19 in April-May 2021, exports showed a positive sign. It has remained over the $30 billion-mark since March last year.
In terms of monthly exports, December saw 38.91 per cent year-on-year (y-o-y) rise to $37.81 billion, the highest-ever figure. The trend continued in 2022 as well with exports amounting to $34.6 billion in January and $34.57 billion in February -- a jump of 23.4 per cent and 25.1 per cent, respectively.
India's merchandise exports had never crossed $30 billion-mark, except for once in March 2019. In fact, merchandise exports for April-February 2021-22 period witnessed a 36.25 per cent jump as compared to a year ago.
Engineering goods export
The government release highlighted that engineering goods exports have gone up by nearly 50% vis-à-vis last year. Export of cotton yarn/fabrics/made-ups, handloom products, gems and jewellery, other cereals and man-made yarn/fabrics/, among others, registered a growth rate of 50%-60%.
Agriculture exports
In the agriculture sector, India was seen to emerge as a major global supplier of food and essential agriculture products. “Agriculture exports buoyancy is driven by commodities such as rice, marine products, wheat, spices and sugar, among others, recording the highest ever agricultural products export in 2021-22,” it added.
Key drivers
The surge in exports during April-February, writes The Times of India (TOI) was fuelled by higher shipments of engineering, petroleum and chemical goods. The volume of agricultural products exported in FY22 was highest ever and was driven by commodities like rice (other than basmati), marine products, wheat, spices and sugar.
Factors that led to the surge: One of the major reasons for jump in exports, according to TOI is rise in pent up demand, which had fallen as the Covid pandemic forced nations to remain under strict lockdown, thereby impacting global trade.
Beside, boost in domestic manufacturing due to production-liked incentive (PLI) schemes and implementation of some interim trade pacts have also led to surge in exports.
Arun Singh, Global Chief Economist, Dun & Bradstreet, says that the surge in India’s merchandise exports was primarily led by petroleum products, iron and steel, and precious stones. “Products such as jewellery, organic chemicals and aluminium also witnessed robust growth. India’s bilateral trade has strengthened significantly with the US, the UAE, Bangladesh and the Netherlands.”
Vicky Bahl, Partner, Grant Thornton Bharat, says a number of factors have contributed to helping the country achieve this target. “When Covid started, a lot of supply chain reorganisation took place among the major industries globally, as their supply chains were dependent on China and some other countries massively. India was the ‘Plus One’ alternative that was on the top of the list for a lot of companies. The steps taken by the government also came at the right time, along with the global sentiment of people not wanting to be dependent on China completely anymore.”
Bahl adds that initiatives like the Production-linked Incentive (PLI) scheme attracted a lot of investments and India is starting to reap the benefits of such measures. He also mentions that high commodity prices and pent-up demand played a role in pushing up the export numbers this financial year. “Commodity prices have gone up and that has pushed the number up. But it still should not take away the sheen of the growth rates as they were in excess of even 30% for some months that we exported,” he adds.
Industry experts are of the view that exports can have a good run in the future if some key aspects are taken care of. Singh of Dun & Bradstreet says, “While the PLI schemes will lend to this momentum in the long term, India needs to improve its logistics infrastructure to make our exports more competitive."
Pradeep Multani, President, PHDCCI points out that the domestic manufacturing industry has become more integrated into global value chains with significant growth witnessed in engineering goods, petroleum, gems and jewellery, organic and inorganic chemicals, ready-made garments of all textiles, cotton yarn/fab/made-ups, electronic goods, plastic & linoleum, marine product, and man-made yarn/fabrics.
Some experts claim that this can help India improve its global merchandise export ranking. “With this extraordinary milestone of $400 billion exports, India can move up from the current 20th position to 15th by surpassing the UAE, Switzerland, Spain and other countries in 2022,” says Vijay Kalantri, chairman, MVIRDC World Trade Centre-Mumbai — a trade facilitating body.
Exports are a significant contributor to employment generation, boost manufacturing and also help in enhancing GDP levels. They also help to elevate MSMEs who form an integral part of the economy.
