“India set an ambitious target of $400 billion of goods exports & achieved this target for the first time ever. I congratulate our farmers, weavers, MSMEs, manufacturers, exporters for this success. This is a key milestone in our Atmanirbhar Bharat journey.”Prime Minister Narendra Modi in a tweet dated 23 March
India is set to exceed the target set for merchandise exports for the financial year from 1 April 2021 to 31 March 2022 (FY 2022), crossing the $400 billion mark for the first time. The target was crossed nine days ahead of the schedule, far exceeding the previous goods export record of $331.02 billion, achieved in FY 2019.
What Are Goods/Merchandise Exports?
A country's exports include both goods (aka merchandise) and services. India has had a robust services sector export for some time thanks to our software industry and related services, and service exports are expected to hit $250 billion for this fiscal year, according to Union Commerce Minister Piyush Goyal.
Goods exports cover all tangible products, from food items like rice, wheat, spices and sugar, as well as engineering goods, chemicals, raw materials for garments like cotton, as well as garments and handloom products.
Where Can You Find the Data?
The Ministry of Commerce and Industry releases the latest trade statistics on a periodic basis. On 14 March, they released the data on India's foreign trade, that is, exports and imports, of goods and services, here.
How Did This Happen?
A press release issued by the central government suggests that India's excellent merchandise exports performance was inspired by prime minister's "relentless focus on exports." Modi had announced $400 billion goods export target during interactions with the exporting community and trade bodies on 6 August 2021.
Commerce and Industry Minister Piyush Goyal noted that there had been a detailed strategy in place to achieve the target, including specific targets set – country-wise, product-wise and EPC-wise, monitoring and course correction, behind the achievement of the export target.
Experts point to large gains in commodities and sectors like petroleum products, iron and steel, precious stones, and improved bilateral trade ties. The supply chain disruptions caused by COVID-19 also offered Indian industries the opportunity to wean countries away from dependency on China.
The Centre also introduced certain schemes in the last couple of years thanks to the pandemic and related pressures, including the Production Linked Incentive (PLI) schemes for exports. The PLI schemes for 13 key sectors of manufacturing have now been announced from FY 2022 onwards.
A District Exports Hub initiative was also adopted to make districts involved in the process of driving the growth of local product exports.
Some experts have also noted that there was a pent-up demand for goods from other countries after reduced spending during the pandemic.
India's goods exports remained above $30 billion for eleven consecutive months from April 2021 to February 2022, with the highest ever monthly exports coming in December 2021 at $39.3 billion. The final month of March is also expected to see monthly exports of above $30 billion.
Which Sectors Saw the Greatest Growth?
Compared with the April-February period for the previous year, India's merchandise exports grew by 46.09 percent.
There are a number of sectors which performed well and even beyond expectations.
Petroleum product exports saw the greatest rise in percentage terms thanks to increased crude prices. Comparing February 2022 to February 2021, the increase was 88.14 percent, from $2471.16 million to $4649.24 million. Over the April-February period, the growth was a staggering 147.6 percent increase.
In absolute numbers, engineering goods exports raked in the most money, with February 2022 figures coming in at $9,321.78 million, an increase of 32.04 percent year on year. Over the April-February period, they grew by 49.7 percent.
Electronic goods exports grew by 42.8 percent over the April-February period, while gems and jewellery exports increased by 57.3 percent.
The agriculture sector had its best ever year in terms of volume of exports, "with India emerging as a major global supplier of food / essential agriculture products" according to the Ministry of Commerce and Industry.
How Big a Deal Is This and Why?
A country's exports are generally a good bellwether to see how its economy is doing, and high exports can be a good way to increase employment levels and boost micro, small and medium enterprises (MSMEs).
Goods exports increases, especially if driven by manufactured goods rather than just commodities and raw materials, are a sign of a country being able to diversify its trade opportunities, and create more value.
Growth in exports obviously means increased inflow of foreign currency, which is again good for the health of the economy.
However, exports cannot be looked at in a vacuum. It is also important to look at the value of imports during the same period, as this is what will determine the balance of trade.
While India's growth in merchandise exports has been impressive, during the same fiscal year, merchandise imports have grown by a greater degree, to $550 billion in the first 11 months of the fiscal year.
The increase in merchandise exports from April 2021-February 2022 compared with the previous year is 46.53 percent, but the increase in merchandise imports is 60.01 percent for the same period.
As a result, the trade deficit when it comes to foreign trade is also at a record high of $176 billion for the first 11 months of the fiscal year, and the increase in exports has to be considered in this light as well.
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