ForumIAS announcing GS Foundation Program for UPSC CSE 2025-26 from 27th May. Click Here for more information.
Contents
News: Govt has announced that India’s merchandise exports have already surpassed the target set for this fiscal year, with overseas shipments crossing a record $400 billion mark by March 21.
Why is this news significant?
This news assumes importance esp in light of the last fiscal’s pandemic-induced slump in global demand.
Also, the fact that the export growth has been achieved against the backdrop of persistent logistical challenges, including container shortages and port congestion, is laudable. It further reflects the concerted effort made by the government in coordination with industry and the country’s overseas missions.
Which sectors have performed well?
Petroleum products were the standout performer as the global surge in oil prices lifted the dollar value of overseas shipments of goods produced at India’s refineries by 150% over the first 11 months of the fiscal.
Key value-added sectors of engineering goods and apparel and garments have also done well this year.
What are some challenges that need to be addressed?
Multiple challenges persist on the trade front.
Inc in trade deficit: Imports have outpaced exports this year, almost doubling the trade deficit in the April-February period to more than $175 billion. The gap is wider than the pre-pandemic year of 2019-2020 as well and points to the pressing need to step up the pace of export growth.
Lack of purchase of capital goods: Project goods were the only item of import, among the 30 broad categories listed by the Ministry that contracted over the 11-month period. The lack of overseas purchases of capital goods for new projects is a clear indicator that private Indian businesses are still not making fresh investments given the lack of momentum in personal consumption.
| Project goods are the input materials required in the construction of civil and private infrastructure projects. The import of project goods may act as a barometer for the pace of infrastructure creation, both public and private, in the country. India is a net importer of such goods and, historically, has had a higher inflow during periods of growing infrastructure activities. |
War in Ukraine and sanctions on Russia is now posing fresh problems for exporters seeking to ship goods to not only these countries but other markets in Europe as well.
What is the way forward?
Commerce and Industry Minister made a reference to the role played by India’s embassies and envoys in exploring new opportunities for Indian products. If the current momentum in exports is to be sustained in the coming years, the diplomatic corps will need to enlarge their role in trade promotion.
Policymakers must go beyond stopgap measures such as enabling rupee-rouble trade. They need to expedite ongoing negotiations on free trade agreements so as to at least help lower some of the tariff walls.
Source: The post is based on an article “Heartening milestone: On India’s overseas shipping record” published in The Hindu on 26th Mar 22.
