At the juncture when India’s is once again emerging as the fastest growing economy in the world, the country is now witnessing the disturbing phenomenon of increasing uneasiness on the external front of its economy.
It is a matter of concern that the ongoing widening of trade deficit caused by rising imports and sluggish export growth, which in turn is ballooning the Current Account Deficit (CAD) thereby putting pressure on the country’s foreign exchange reserves.
While on hand the alarming depreciation of Rupee vis a vis US dollar is causing havoc in India’s external front of the economy, the export sector is expected to get some relief with export from India becoming competitive in the pricing front. Still relief is not expected to be significant.
In the face of declining trade and slow global economic growth India is steadfastly working out a strategy to boost its crucial export sector. As exports hold key for accelerating India’s growth, the Indian Commerce Ministry keeping the changing scenario in the global trade arena in mind; is now reorienting various export promotion mechanisms to inject growth momentum into several segments of India’s export basket. These have emerged as major foreign exchange earners.
India’s Commerce and Industry Minister Suresh Prabhu has said “there was predictability in doing business globally in the past six seven decades but we are seeing a dramatic change in global trade in the past few months.”
The global recovery is fragile and there are some elements of risk from threats such as confrontational trade stances that major countries have taken against each other. India is now increasingly feeling the imperatives to reshape its trade strategies to boost its export.
Trade strategists say sectors such as metals, machinery, plastic and marine products may drive India’s export growth in 2018-19 as a diverse set of sectors upstage traditionally strong exchange earners such as gems and jewellery and textiles in the growth charts.
Statistics reveal export spurt in 2017-18, whereby India successfully managed to achieve more than US $ 300 billion worth of outbound trade after two years, was supported by a consistent annual rise in commodities and finished goods from these sectors.
The tally for total exports stood at a revised US $ 303.66 billion for 2017-18, above the government’s target of US $ 300 billion. In 2016-17, this was US $ 275.85 billion. The near 10 per cent growth was led by an over 113 per cent growth across principal commodity groups where India has not historically enjoyed high export competitiveness.
US continues to be the top destination for India’s engineering products in the capital goods sector, registering an impressive 44.3 per cent growth in the last fiscal year. US is also the largest importer of Indian ‘industrial machinery’ for the year with 25 per cent year-on-year growth, followed by the UK with a 44 per cent increase in shipments. Bangladesh and Germany were other key markets for Indian industrial machinery. Exporters are now expecting more support from the government at the policy level, including faster clearance of tax refunds.
Experts feel India’s export basket will focus more on marine products which continue to see a persistent rise. Comprising mainly of shrimps, prawns and fish; India’s aquatic exports stood at US $ 7.38 billion in 2017-18 and have seen three consecutive years of growth. The government is in the process of preparing a comprehensive roadmap to double exports of marine products, said Mr. Prabhu, the Commerce and Industry Minister. This will include measures to strengthen aquaculture production in states, potential collaborations, marketing and integration of supply chains.
The government is also focusing on inland fisheries, which have recently made large strides in exports, as a priority area, and is aiming to create a system for all the coastal states to work in sync in order to develop the budding sector.
With India emerging as the fastest growing economy in the world, major countries are also keenly watching India’s trade policies. India is presently known as the most important players in the global economic landscape. Its trade policies, government reforms and inherent economic strengths have attributed to its standing as one of the most sought after destinations for foreign investments in the world. Also, technological and infrastructural developments being carried out throughout the country, this augurs well for the trade and economic sector in the years to come.
With India striking important deals with Japan, Australia and China, the external sector is increasing its contribution to the economic development of the country and growth in the global markets. Moreover, by implementing the five year Foreign Trade Policy (2014-19), India’s share in world trade is expected to double from the present levels.