Emerging demand scenario in the global markets vis-à-vis significant growth trajectory of the World economy at 5.5% by IMF indicates a double digits exports growth trajectory for India in the current financial year 2021-22.

Increase in the value of exports by 60% at USD 34.4 billion in March 2021 from USD 21.4 billion in March 2020 has enhanced the expectations of a significantly high growth for India’s exports in 2021-22. March 2021 exports growth is also higher by 5% on the value of exports at USD 32.7 billion in March 2019 which is exhibiting a strong build-up of our exports during the recent times on the back of various effective reform measures undertaken by the Government during the last one year to mitigate the daunting impact of pandemic covid-19 on India’s trade and industry.

Despite a significant deceleration in global GDP and fall in global demand for goods and services in 2020-21 caused by daunting impact of pandemic covid-19, trade deficit has improved significantly from USD 77.7 billion in FY 2019-20 to USD 12.7 billion in FY 2020-21 of which merchandise trade deficit has improved from USD 162 billion in FY 2019-20 to USD 98.5 billion in FY 2020-21. This is a strong indication that domestic capacity building and strengths of the Indian economy are becoming strong and hold much potential to produce more to fulfil domestic demand and export in the international markets.

As per the latest release of Ministry of Commerce and Industry on April 15, 2021, the overall exports of goods and services for the year 2020-21 are estimated at USD 493.2 billion in 2020-21 and overall imports of goods and services for the year 2020-21 are estimated at USD 505.9 billion in 2020-21 with an overall trade deficit of USD 12.7 billion.

Cumulative value of merchandise exports for the period April-March 2020-21 was USD 290.63 billion as against USD 313.36 billion during the period April-March 2019-20, registering a negative growth of (-) 7.26 per cent. Cumulative value of merchandise imports for the period April-March 2020-21 was USD 389.18 billion as against USD 474.71 billion during the period April-March 2019-20, registering a negative growth of (-) 18.02 per cent.

Monthly trend in India’s merchandise trade

As per the latest press release by RBI dated 15th April 2021, services exports in February 2021 were USD 17.55 billion registering a negative growth of (-)1.02 per cent. The estimated value of services export for March 2021* is USD 17.75 billion. The services imports in February 2021 were USD 10.61 billion registering a negative growth of (-) 4.10 per cent. The estimated value of services import for March 2021* is USD 10.84 Billion.

Monthly trend in Indi’s services trade

Source: PHD Research Bureau; PHDCCI Compiled from Ministry of Commerce and Industry, Government of India *Note: The latest data for services sector released by RBI is for February 2021. The data for March 2021 is estimation, which will be revised based on RBI’s subsequent release. Taking merchandise and services together, overall trade deficit for April-March 2020-21 is estimated at USD 12.74 Billion as compared to the deficit of USD 77.76 Billion in April-March 2019-20.

Exports outlook

India’s exports faced a challenging time on account of subdued global economic performance, disrupted supply chains and overall depressive demand scenario in the international markets in 2020-21. On the back of such a scenario, the Government has undertaken a series of economic and business reforms with a thrust to promote trade and ease of doing business in the country.

There has been a major push for trade facilitation with continuous efforts to improve trade infrastructure, single window clearances, reduction in the number of documents required for clearances, digitalization of various application processes, and simplification of various export incentive schemes, among others.

Various banking and financial sector relief measures have been undertaken to support domestic industry, especially for the Micro, Small & Medium Enterprises (MSMEs), which constitute a major share in exports. The recent Production-Linked Incentive (PLI Scheme) for the key sectors of the economy including electronic/technology products, automobiles & auto components, telecom & networking products, textile products, food products, among others would go a long way to enhance the competitiveness of the exports, larger economies of scale and re-energies India’s exports growth trajectory with increased presence in the world exports, going forward.

Considering the low base effect of 2020-21 and reforms push to the exports along with emerging demand in the global economy, India’s exports have potential to post double digit growth rate in 2021-22.

Going ahead, Structural improvements in export and logistics infrastructure, developing a strong supply chains for Micro, Small & Medium Enterprises (MSMEs) exports, PLI scheme and continued reforms for ease of doing exports would go a long way to push growth trajectory of exports to the higher and higher level.

Efforts should be made to improve the country’s export competitiveness in areas such as the agro and food processing products as we post record food production year after year and there is huge global market opportunity for this segment, textiles and garments; government has announced development of mega textile parks to create economies of scale and increased competitiveness of our textile products, gems & jewellery which has emerged very promising area vis-à-vis state of the art desigining facilities in India, drugs & pharmaceuticals vis-à-vis emerging demand for health products in the internationsl market, vehicles, parts & accessories of vehicles, petroleum oils, sports goods, furniture, information technology & information technology enabled services (IT&ITeS), accounting and finance services, audio visual services, legal services, communication services, fashion and lifestyle, among others.

(Dr. S.P. Sharma is Chief Economist & Director of Research · PHDCCI (PHD Chamber of Commerce and industry, India)

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