In an uncertain world, India’s trade push
- Pickup in global trade, free-trade agreements should spur India's exports. However, uneven global growth and geopolitical tensions need monitoring.
Highlights:
- Over the past few years, global trade has been very volatile
- first on account of the Covid-19 pandemic and then due to geopolitical conflicts
- As per data from the United Nations Conference on Trade and Development since the middle of 2022, the value of global merchandise trade has shrunk continuously
- In fact, in 2023, global merchandise exports fell by 4.6 per cent.
- The first quarter of 2024, although, saw some sequential improvement.
- India saw merchandise exports falling 4.7 per cent in 2023.
- However, this was better than developing Asia as a whole, which saw merchandise exports decline by 6.8 per cent.
- In 2023-24, India’s merchandise exports were down 3.1 per cent from 2022-23.
- But the monthly data does suggest a pick up.
India’s exports:
- Besides an uncertain global environment, India has also had to deal with lower international commodity prices, which have reduced its export bill measured in dollars.
- In 2023-24, the sharp decline in crude oil prices was a big contributor to the fall in India’s overall merchandise export bill.
- With more than a 20 per cent share, oil is India’s single largest export item
- Excluding petroleum and gems and jewellery exports, core exports were up 1.4 per cent
- This indicates that India was able to ship a higher volume of goods.
- The 24 per cent growth in electronics goods exports last year reflects surging exports of telecom instruments or mobile handsets, spurred by the Production Linked Incentive scheme.
- Other large core categories such as drugs and pharmaceuticals, engineering goods and agricultural goods also saw healthy export growth.
- It is also noteworthy that despite the ban on non-basmati rice and wheat and some other curbs from time to time, overall agriculture and allied exports growth remained healthy.
- In terms of the country of destination, oddly, goods exports to the US contracted in 2023-24.
- However, there has been an uptick over the past few months.
- On the other hand, exports to the Euro region grew last year despite a sharp economic slowdown in the region.
- India’s exports to the Gulf Cooperation Council (GCC) countries also rose, reflecting a further increase in exports to the UAE
Challenges:
- Exports of labour-intensive sectors such as gems and jewellery, textile products, leather and leather products, marine products and plastics, declined last year.
- The share of most of the labour-intensive categories in the country’s merchandise exports has come down drastically over the last decade.