India’s annual goods exports crossed the $400-billion mark for the first time ever.
The achievement of $400 billion in merchandise exports represents a growth of over 21 per cent from $330 billion achieved in FY2019 prior to the Covid-19 pandemic.
How did India achieve this?
- The milestone was achieved due to increase in shipments of merchandise, including engineering products, apparel and garments, gems and jewellery and petroleum products.
- The agriculture sector too had recorded its highest-ever export during 2021-22 with the help of export of rice, marine products, wheat, spices and sugar.
Reasons behind the surge
- One of the major reasons for jump in exports 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.
- The Centre implemented a series of steps to promote exports of both goods and services and that includes the introduction of Refund of Duties and Taxes on Exported Products (RoDTEP) and Rebate of State and Central Levies and Taxes (RoSCTL) Schemes.
- One of the key factors driving the surge in exports is pent up demand that was not met during major waves of the Covid-19 pandemic.
- Expansionary monetary policy by developed economies in response to the economic impact of the pandemic has also boosted demand for Indian exports.
Where has been the increase in imports?
- While exports have grown sharply, merchandise imports have grown even faster reaching $550 billion in the first 11 months of the fiscal.
- It has seen sharp growth in imports of crude oil, coal, gold, electronics and chemicals.
- Rising prices of commodities including crude oil and coal have played a significant role in adding to India’s import bill and taking the trade deficit for the first 11 months to a record high of $176 billion.
Why exports are important?
- Exports are one of the fundamental drivers of growth for any economy.
- It can influence a country’s GDP, exchange rate, level of inflation as well as interest rates.
- A robust export data is beneficial as it leads to increase in job opportunities, enhances foreign currency reserves, boosts manufacturing and also increases government’s revenue collection.
- It is also a good means by which a country can bring itself out of the recession phase.
- Besides, it also plays a key role in strengthening the domestic manufacturing units by scaling up their quality to make India made products compete and stand out against global peers.
Source – The Hindu