At the start of this fiscal year, the Center set itself a target of $ 400 billion in FY22 exports of goods, which seemed ambitious at the time. After all, our exports for FY21 fell 7.3% to $ 290 billion from $ 313 billion the year before. The drop is mainly due to a sharp drop in exports of petroleum products, with Covid-19 lockdowns hampering transport activities and hurting demand for fuel. Even though we see Exercise 21 as an oddity due to the lockdowns around the world, India’s exports have put on an impressive show during this fiscal year. From April to November of this year, they rose 51% to $ 263 billion and are expected to exceed last year’s figures by December. The increase in Indian exports could be attributed in large part to the growth dynamics in advanced economies and the resulting increase in global import demand. The depreciation of the rupee has become a blessing in disguise as it makes Indian products in labor-intensive sectors like textiles and clothing more competitive globally. India is also aggressively negotiating free trade agreements with the European Union, Australia, the United Arab Emirates, the United Kingdom and the Gulf Cooperation Council.
Any such agreement that materializes in the coming months will ensure better access to Indian products. The recently introduced PLI programs will also support growth, especially in the mobile phone, electronics and pharmaceutical sectors, as the additional production will also stimulate additional exports. In addition, the government has put in place export incentive programs and allowed some pending tax refunds to exporters to improve their liquidity. To give us an idea of whether India’s export growth can keep up at this rate, we have with us Professor Amita Batra from Jawaharlal Nehru University. Considering all these factors, can the dynamics of exports be reflected in the next fiscal year? The answer comes with several caveats Global demand will depend on the ability of countries to contain Covid-19 and the new Omicron variant. Another major obstacle is the shortage of containers and high freight rates. With Indian imports increasing and China’s export growth slowing, the container shortage has eased slightly in India, but freight costs are still far from pre-pandemic. Average container prices at Chennai and Mumbai ports are still around 150% above 2019 levels. Exporters have indeed asked the government for freight assistance. In addition, India Ratings and Research has estimated that it will not be easy to maintain the current momentum of export growth, as the stimulus-induced demand in developed economies may normalize in 2022 and it may tip in favor. services. India is doing all it can to boost outbound shipments, but things beyond its control threaten to hold back the exporting side.
Watch the video