Shuffling feet: On foreign trade and policy responses

Source: The post is based on an article “Shuffling feet: On foreign trade and policy responses” published in The Hindu on 17^th February 2023.

Syllabus: GS 3 – Indian Economy

Relevance: changes in exports and imports

News: The article discusses the changing trends of export and import in India.

How has export and import been in India for 2023?

The exports from India got a disappointing start in 2023. Merchandise shipments fell 6.6% in January.

Engineering exports fell 10%; pharma products lost momentum along with 14 other products.

However, with the exports, even imports are also falling down.

If this trend continues, India’s current account deficit for 2022-23 will be lower than the projected CAD by most of the agencies.

What are the reasons behind slowing export and import?

The drop in imports suggests that domestic demand growth is decreasing while the decline in export is due to the global economic slowdown.

India’s weaker trade balance for the fiscal year 2022-23 was due to the two reasons- a) a slowing world economy hurting exports and b) resilient domestic demand shoring up imports.

However, these reasons seem to be diminishing.

What is the way ahead?

Economic growth is expected to increase in the major economies.

For example, U.S. retail sales grew faster than expected in January and the U.K.-based trading businesses now expect an increase int the turnover this March.

These will bring opportunities for India’s export markets. Therefore, industry bodies and the government must work together to help exporters and export grow by capturing these global opportunities.