Unfavourable trade balanceDate: 25 January 2022 Tags: Miscellaneous
Exports from India have risen by about 50% in the first nine months of this fiscal. This puts India firmly on the path to achieve $400 billion in exports.
India has been eyeing higher share for its products across the globe by aggressively trying to increase its exports.
The rise in exports has also been complemented by rise in imports, leading to a sharp uptick in India’s fiscal deficit.
To expand opportunities for Indian exporters, the country is also negotiating a number of Free Trade Agreements (FTA).
Performance of exports
India’s exports have hit $301.4 billion, 49.7% more year-on-year basis. The petroleum products and gems and jewellery are the key components for growth.
The export numbers are being boosted by a worldwide increase in trade. Global trade in both goods and services has grown by 28%.
Engineering goods like iron and steel products, organic and inorganic chemicals and textile products such as cotton yarn and fabrics have been key contributors to export growth.
Exports of engineering goods grew 38.4 per cent, electronic goods rose 34 per cent and organic and inorganic chemicals grew by 27 per cent during this period.
Reasons for growth
Indian goods are receiving positive sentiment internationally. Indian products are being upgraded to cater to changing demands.
Covid-19 infection outbreaks in key competitors such as Vietnam have caused global supply chain disruptions, benefitting India.
Import of goods
Major contributors include machinery, electronic goods, vegetable oil, coal, chemicals along with gold and petroleum, two of the biggest contributors.
The trade deficit is expected to be around $142.4 billion in goods. The trade surplus in service sector has reduced to total deficit of around $40-45 billion.
Measures by government
Government is negotiating FTAs with countries like Israel, UK and Australia. However, domestic producers are vary of foreign players entering Indian market.