Export-to-GDP ratio: India must get back to 2013-14 level, shows data | Business Standard News

Clipped from: https://www.business-standard.com/article/economy-policy/export-to-gdp-ratio-india-must-get-back-to-2013-14-level-shows-data-122030700924_1.html

India is expected to have an export-to-GDP ratio of 20.8% this year; in 2013-14, India’s export-to-GDP ratio was 25.4%

exports

On Thursday, while addressing a post-Budget webinar, Union Minister of Commerce Piyush Goyal urged the industries to increase India’s share in global trade to 10 per cent and increase the export to GDP ratio to 25 per cent.

The target may seem achievable given the stellar growth the economy has witnessed post-Covid and the 33 per cent rise expected in exports compared to last year. But a Business Standard analysis shows that it would not be a new development for the country.

Analysis of the last few years’ GDP and export data shows that in 2013-14, India’s export-to-GDP ratio was 25.4 per cent. It started declining since then and came down to 23 per cent in 2014-15 when the new government took charge. It further declined to 18.8 per cent in 2017-18 as GDP grew faster than exports.

Although it rose to 19.9 per cent in 2018-19, on the back of a 17.3 per cent increase in exports compared to the previous year, it stayed at 18.7 per cent for the next two years. This year as merchandise exports are expected to hit the $400-billion mark for the first time, the export-to-GDP ratio will cross 20 per cent.

While the export-to-GDP ratio improvement has undoubtedly had a lot to do with export performance in the last five years, GDP growth not keeping pace is also a factor.

Between 2012-13 and 2016-17, export growth averaged 6.9 per cent; for 2017-18 and 2021-22, it is expected to increase 11.5 per cent. GDP growth during this period will decrease from 12 per cent to 9.2 per cent.

Within exports, the performance has been driven by merchandise exports over the last five years. While merchandise exports grew at an average rate of 5.2 per cent between 2012-13 and 2016-17, during 2017-18 and 2021-22, export growth will be 11.5 per cent. In contrast, service exports will increase from 10.3 to 11.7 per cent.

But India’s performance in merchandise trade pales in comparison to the rest of the competing economies.

India’s share in global merchandise exports increased from 0.66 per cent to 1.57 per cent between 2000 and 2020, whereas China’s jumped from 3.86 per cent to 14.7 per cent. Vietnam registered an increase from 0.22 per cent to 1.6 per cent.

Due to the pandemic, Vietnam’s share of global exports surpassed India’s for the first time in 2020.

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