lipped from: https://www.financialexpress.com/opinion/indias-strategic-exports-growth/3061006/
An unprecedented transformation in its export promotion strategy has led to a remarkable and sustainable rise in India’s exports.
An unprecedented transformation in its export promotion strategy has led to a remarkable and sustainable rise in India’s exports. (IE)
Despite strong headwinds, India’s exports performance in the last fiscal has been highly impressive. India’s total exports, merchandise exports and services combined, grew at 13.8% to achieve a new record of $ 770 billion in 2022-23, surpassing not only its own record performance of $676 billion last year but also its target of $750 billion during the current fiscal. Impressive growth of services exports at 26.8% during 2022-23, despite global economic slowdown, helped keep overall growth of India’s exports at 13.84% despite merchandise exports growth of 6.03%.
Services exports recorded an impressive rate of 26.8% to touch a record high of $323 billion in 2022-23 from $ 254.5 billion in the previous year whereas India’s merchandise exports increased at 6.03% to $447 billion during the current financial year from $422 billion in the previous year. Imports grew to $714 billion from $613 during the same period. India’s impressive exports growth is the last fiscal is extremely commendable in view of a its unprecedented record growth of 45% to reach an all-time high for exports—$422 billion in the preceding fiscal .
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Global merchandise trade volume grew at 4.2% in the first two quarters of 2022, declined to 2.7% in the fourth quarter, and further got strained in the last quarter of the last fiscal. Moreover, notwithstanding the economic slump in Europe and other developing countries due to post-Covid supply-chain disruptions, the Russia-Ukraine war, Sino-American geopolitical tensions, and post-Brexit economic woes, India’s record exports in last fiscal are highly commendable.
India’s incredible strides in its exports performance were a result of its well-crafted trade policy interventions, its efficacious implementation, and a host of other initiatives to create a conducive eco-system. Export facilitation ensured effective conceptualisation and implementation of a bunch of export promotion schemes such as Market Access Initiative (MAI), Remission of Duties and Tax on Exported Products (RoDTEP), Trade Infrastructure for Exports Scheme (TIES), and Interest Equalisation Schemes on pre- and post-shipment rupee export credit among others.
PLI schemes have been game changers in transforming not only India as a manufacturing hub, but also to curtailing its burgeoning trade deficit in electronics and other manufacturing goods. With an outlay of over Rs 2 trillion, the scheme, launched in March 2020, initially targeted manufacturing mobiles and components, electrical components, and medical devices. It was later extended to 14 manufacturing sectors such as electronics and IT hardware, white goods, drones, telecom, pharmaceuticals, automobile and auto-components, solar modules, advanced chemistry cell batteries, metals and mining, apparels and textiles. As a result, electronics manufacturing attracted massive investments and its exports grew rapidly by over 55% annually. Exports of mobile phones alone crossed $11 billion during the last fiscal as a result of the newly formed conducive ecosystem.
Logistics, a critical stumbling block in India’s exports competitiveness, has been proactively addressed in the recent Union budget 2023, wherein capital expenditure allocation has sharply been increased by 33% to a record Rs 10 trillion on development of rail, road, air, and ocean infrastructure, would go a long way to make the exports logistics proficient and remarkably integrate Indian production systems with global value chains.
An unprecedented transformation in its export promotion strategy has led to a remarkable and sustainable rise in India’s exports. Cyclic fears of slowdown and imminent recession threatening the world economy over the recent time adversely impacted India’s exports growth. To cope up with emerging challenges in the world market, India embarked on a new Foreign Trade Policy from April 1, 2023, that is dynamic, flexible, and futuristic.
In recent years, the ministry of commerce is actively engaging with state governments for speedy and effective implementation of policy measures to promote exports. Measures taken by the Modi government in the last few years to push up states’ participation in exports promotion, which hitherto had been indifferent, have helped. Not only has this happened at the state level, but there is even a district-level focus via the One-District-One-Product scheme (ODOP) and the promotion of district exports hubs. Each of the Indian states were asked to prepare their own export promotion strategy involving not only identification of potential products and markets, but also the bottlenecks in realising their full exports potential. Moreover, proactive involvement of Indian missions abroad, not only in market identification but also in facilitating the entry of Indian products in international markets has been a strategic transformation in India’s exports strategy.
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Most Free Trade Agreements (FTAs) signed by India previously hardly served our trade interests. The ministry of commerce reexamined all the FTAs and is proactively engaged in exploring newer ones to benefit India’s trade interests. Recently, India negotiated new FTAs meticulously with unprecedented speed with UAE, Mauritius, and Australia and it is in an advanced stage of negotiation with the UK, while actively exploring new agreements with the EU and Canada.
In view of the imminent challenges in international markets emanating from rising geopolitical tensions, global food insecurity, unanticipated economic fallouts due to monetary tightening, and risks due to financial stability and debt increase, India’s strategic and dynamic policy intervention would be a game-changer in facilitating us to be a dominant player in the global marketplace.
The writer is director, IIPM Bengaluru and professor, Indian Institute of Foreign Trade, New Delhi