Source: The post fluctuations in global trade and India’s export performance has been created, based on the article “In an uncertain world, India’s trade push” published in “Indian Express” on 2nd May 2024.
UPSC Syllabus Topic: GS Paper 3-Economy-growth and development
News: The article discusses the fluctuations in global trade and focuses on India’s export performance. It covers India’s struggles and improvements in export numbers, the impact of declining commodity prices, and specific sectors showing growth.
For details information On India’s Agricultural Export Sector read this Article here
What is the trend in Global Trade?
According to the United Nations Conference on Trade and Development, the value of global merchandise trade has been decreasing, falling by 4.6% in 2023.
However, the first quarter of 2024 showed some signs of recovery in global trade.
Geopolitical tensions, such as the conflict in Europe that began in February 2022, caused a spike in commodity prices initially but these prices have been declining more recently, further impacting global trade values.
How has India performed in Exports?
India’s merchandise exports declined by 4.7% in 2023, slightly better than the average for developing Asia, which saw a 6.8% decrease.
In the financial year 2023-24, India’s exports were valued at $437.1 billion, down 3.1% from the previous year.
Exports of electronics surged by 24% due to incentives like the Production Linked Incentive scheme, highlighting a successful sector amid broader challenges.
Excluding petroleum and gems and jewellery, core non-energy exports from India saw a modest increase of 1.4%.
Agricultural Exports: While there were occasional bans on exports like non-basmati rice and wheat, agriculture and allied sectors still showed healthy growth. Categories like meat, poultry, spices, fruits and vegetables, and oil seeds contributed positively to export figures.
What are the key factors affecting India’s Exports?
Global Economic Climate: Uncertainties in the global economy, including impacts from COVID-19 and geopolitical conflicts, have influenced India’s export dynamics.
Commodity Prices: Lower international commodity prices have reduced the dollar value of exports. For instance, the sharp decline in crude oil prices significantly reduced India’s petroleum export bill by $13.3 billion.
Sector-Specific Growth: There has been notable growth in certain sectors, such as electronics, which saw a 24% increase in exports, largely driven by incentives like the Production Linked Incentive scheme.
Geopolitical Tensions: The ongoing conflict in Europe post-February 2022 initially spiked commodity prices, affecting export revenues before they began to decline.
What challenges and opportunities lie ahead?
Challenges
Decline in Labour-Intensive Sectors: Exports in sectors like gems and jewellery and textiles have significantly decreased, needing strategic focus to revive these industries.
Global Instability: Ongoing geopolitical tensions and uneven global economic growth pose risks to sustained export growth.
Opportunities
Global Economic Recovery: With global growth projected at 3.2% in 2024 by S&P Global, there is potential for increased demand for Indian exports.
Bilateral Trade Agreements: India’s ongoing negotiations and agreements with major economies can enhance export opportunities and drive growth in various sectors.
Question for practice:
Discuss the impact of geopolitical tensions and declining commodity prices on India’s export performance in 2023-24.
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