The Export-Import Bank of India, or India Exim Bank, pegs India’s merchandise exports for January-March at $110.9 billion, leading to record exports of $447.3 billion for the full year. Non-oil exports are forecast to amount to $87.7 billion during the same period.
India achieved an all-time high annual merchandise export of $422 billion in FY22. The Netherlands has displaced China from the third spot as India’s exporting partner in April-December FY23 and India has diversified its export destinations over time with the share of South Africa, Brazil and Saudi Arabia rising while those of China and the US fell.
“The new diversified markets including those of Brazil, South Africa and Saudi Arabia have led to the increase in exports by up to two times… The ongoing trade negotiations with UK, EU, Canada, Israel etc, will also add further impetus to our exports,” A Sakthivel, President, Federation of Indian Export Organisations, had said earlier.
However, the bets of record numbers come despite the fact that tightening of global financial conditions and persistent geopolitical woes continue to be a major hindrance, which is already reflected in weak manufacturing exports.
“India’s exports could be shadowed by deepening global energy crisis, tighter global monetary and financial conditions, continued slowdown in select major trade partners and continued uncertainty around the Russia Ukraine conflict,” India Exim Bank said.
India’s merchandise exports fell 6.58% year-on-year to $32.91 billion in January on the back of slowing global demand, contracting for the second month. Trade deficit touched a 12-month low of $17.75 billion in January as imports shrank 3.63% for the second consecutive month. Imports during the month amounted to $50.66 billion, according to the data. Merchandise exports had declined 12.2% to $34.48 billion in December 2022.
Data for India’s February merchandise exports is expected later today.
The Reserve Bank of India has in its most recent commentary on growth shown optimism on most indicators except for exports. The RBI-led rate-setting panel said, “External demand is likely to be dented by a slowdown in global activity, with adverse implications for exports.”
What is pushing India’s export ambitions is the services exports, which however is not immune to external exogenous factors and bleak economic outlook in advanced economies.
An estimated 49.1% rise in services exports in January helped improve India’s trade deficit. Overall trade deficit narrowed to $1.27 billion in January, the lowest in 19 months.
“The main engine behind this export growth is the services sector, which has been growing at historically high growth rate of about 30%,” commerce secretary Sunil Barthwal said last month. “We are optimistic that this growth momentum would continue despite strong global headwinds.”
Commerce and industry minister Piyush Goyal has recently been very vocal about record goods and services exports. He said overall exports will cross $750 billion in this financial year and India is expanding rupee trade with several countries, many of which are at an advanced stage of dialogue and finalisation.
India is also betting on the free trade agreements to shore up exports. New Delhi has inked trade pacts with the UAE and Australia recently, and is in talks with the UK, EU and Canada for similar agreements.