Challenges with opportunities

Prime Minister Narendra Modi, in the 87th edition of 'Mann ki Baat' programme, congratulated the nation for achieving USD 400 billion export target in FY 2021-22 — which is indeed laudable. As per the Reserve Bank of India data, earlier, India's outbound merchandise trade had registered the peak at USD 330 billion in 2017-18, which subsequently declined to USD 313 USD in following fiscal. The PM rightly pointed out that the record export figures indicate that the "demand for Indian goods is rising in the world." This, however, may just be one of the several factors that have driven such a robust growth in the Indian export sector. Economic experts are pointing out that a large part of the exports growth for FY 2021-2022 has come on account of the pent-up demand for products, as the world appears to be gradually finding its way out of the pandemic after a two-year long hiatus. The pandemic-driven crisis is still far from over and, as countries keep emerging out of the flux, greater opportunities may come India's way. At the same time, the ongoing European crisis, resulting from the Russia-Ukraine war, is another factor that requires consideration here. As the world's major exporters of wheat and other food grains, Russia and Ukraine, are caught in a war, India, being an agriculturally dominant country, has a huge opportunity of filling the gap. Furthermore, as the West is trying hard to distance itself from the Chinese imports, India has another chance to claim the trade market in the region. India has witnessed a phenomenal rise in exports to countries like Australia and other Western nations. The country's exports to Australia, for instance, have risen by 94 per cent. As the rift between China and the West doesn't seem to tone down anytime soon, India must be ready with a holistic and long-term strategy to acquire the opportunity gap — without ceding it to other nations like Vietnam and Bangladesh that are closely competing for the space. All in all, India is currently in a situation where it has the prospect of gaining big, but only after it deals well with the challenges. It won't at all be an exaggeration to say that India is in an advantageous position when it comes to attracting importers. Can India capitalize on this opportunity? The indications are all good thus far. However, enhancing its export potential is not the only task ahead of the nation. The country also faces the challenge of bridging the gap between its exports and imports. While the USD 400 billion exports brought in a wave of excitement among small and big entrepreneurs, around USD 500 billion import bill presents a concerning situation, leading to a staggering trade deficit of around USD 190 billion. Maintaining a feasible trade deficit by balancing between imports and exports will be a daunting task for policymakers, particularly as the Indian economy is in its recovery phase. Signs certainly are not good presently, as international oil prices remain well over the desired limit, making things difficult for India which imports 80 per cent of its oil from the international market. Further, finalization of free trade agreements (FTAs) with a bunch of countries, including Australia, the United Kingdom, the GCC, Bangladesh etc., in a timely manner, will be a requisite for further boosting the growth in the exports sector. Another area that the government urgently needs to work upon is the diversification of the export basket. The current high in export figures has been driven mostly by engineering goods, petroleum products, gems & jewellery, electronic goods etc. The government should now focus on devising policies that would bring the export of products related to agriculture and small-scale industry at par with that of leading sectors. Then only the benefits of growth in trade will trickle down to all sectors of the economy. Indeed the agriculturists, manufacturers, entrepreneurs — small and big — need to be congratulated at this juncture but the policymakers also need to turn their eyes towards the huge potential in the export sector to make sure that optimal gains are made out of the situation.