The growth and global demand will also depend on whether the countries would be able to contain COVID-19 and the new variant Omicron through massive vaccination worldwide
After staging a strong recovery from COVID-induced slowdown in 2021, India’s exports are likely to extend the growth story to the New Year also on increased demand in the global markets, boost in domestic manufacturing due to production-linked incentive schemes, and implementation of some interim trade pacts. Expectations of positive growth in the country’s exports are also backed up by the outlook of the World Trade Organisation (WTO) which predicts a 4.7 percent expansion in the global merchandise trade volume in 2022.
Exporters believe that the outbound shipments would cross USD 400 billion mark in this fiscal going by the current momentum and may reach USD 475 billion in 2022-23. However, the growth and global demand will also depend on whether the countries would be able to contain COVID-19 and the new variant Omicron through massive vaccination worldwide, they suggest.
According to a Reserve Bank of India survey, released in September, exports of software services, including services delivered by foreign affiliates of Indian companies, stood at USD 148.3 billion in the fiscal year to March 31, 2021. This is more than USD 145.3 billion the world’s top oil exporter, Saudi Arabia expects from oil sales in 2021. With the largest engineering population in the world, the software export story was seeded about four decades ago and has huge potential to go up further. But software exports are just a part of India’s export-led growth story which is gaining momentum.
Commerce Secretary BVR Subrahmanyam said that the world respects India as a trusted global business partner now and the country’s exports are growing in regions including the Middle East, Arica, and South American nations, besides India’s traditional destinations. “An intense review and monitoring at macro and geographical levels are helping to find new areas of trading relationships. Various measures to improve ease of doing business, incentivisation schemes like PLIs, rationalisation of duties is facilitating the trade like never before,” he told PTI.
To boost exports, the government has taken several measures such as notifying RoDTEP (Remissions of Duties and Taxes on Exported Products) rates, and releasing Rs 56,027 crore against pending tax refunds of exporters and steps to promote ease of doing business, the secretary added. Subrahmanyam said that a series of measures by the central government and the resilience of Indian exporters have helped in registering record growth in exports so far.
According to another senior official, the Department of Commerce is working on the new Foreign Trade Policy (FTP) and aggressively negotiating Free Trade Agreements (FTAs) with key trading partners including the UAE, the UK, and Australia and these measures would help in registering record growth in exports in “next year as well”. The centre has implemented a series of steps to promote exports of both goods and services and that includes the introduction of RoDTEP and Rebate of State and Central Levies and Taxes (RoSCTL) Schemes, the launch of Common Digital Platform for Certificate of Origin to facilitate trade and increase FTA utilization by exporters, promoting districts as export hubs by identifying products with export potential in each district and addressing bottlenecks, and promoting ease of doing business.
The recently introduced PLI schemes will also support growth in the New Year, particularly in mobile, electronics and drugs and pharma sectors as incremental production will push additional exports as well. According to Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai, much will depend on whether “we would be able to contain Covid-19 through massive vaccination across the globe and be able to create required capacity”.
This will decide whether the country should look for 15-20 percent growth or even more and looking into the emergence of new variants and supply-side challenges at this point of time, “we would like to be a little conservative and will aim for an export of USD 460-475 billion in 2022-23,” he said. Sahai added that while the demand side of exports should be taken care of by the industry, industry and the government should work together to address the supply side challenges.
“An increase in the prices of inputs, skyrocketing freight, and delays in shipments and payments have resulted in the need for additional credit. Unfortunately, additional credit requires additional collateral as well by the banks. The government may consider giving a push to container manufacturing in the country as we require a large number of containers for inland coastal shipping,” he suggested. Since January this year, exports are mostly recording double-digit growth on account of a low base. In 2020, exports were hit hard by the impact of the Covid-19 pandemic.
Rising imports of gold and crude oil have pushed the country’s imports and widened the trade deficit (difference between exports and imports). The trade deficit touched a record USD 23.27 billion in November. Leading exporter and founder chairman of Technocraft Industries India Sharad Kumar Saraf said that as the Indian economy is reviving at a faster pace, imports are rising.
“Exports will do better in 2022 on account of health demand in global markets, Customers who have moved out from China are looking at India. Schemes like PLI will start yielding fruits from the new year,” Saraf said. Ludhiana-based Hand Tools Association President S C Ralhan also said that exports would do good in the new year, but the government should take immediate steps in containing rising shipping rates and raw material prices.
Promoting exports helps a country create jobs, boost manufacturing and earn more foreign exchange.