New Delhi: India’s export growth is likely to be flat in the next fiscal if the global economy does not pick up, the Economic Survey said on Tuesday.
The Survey said that though India’s merchandise exports have touched an all-time high of $422 billion in 2021-22, the world economy has started facing formidable headwinds and the ripple effect of the global trade slowdown has started reflecting in India’s goods export growth.
India’s exports contracted by 12.2 per cent to $34.48 billion in December 2022 due to the global demand slowdown, and the trade deficit widened to $23.76 billion during the same period, according to government data.
During April-December this fiscal, the country’s overall exports rose 9 per cent to $332.76 billion while imports increased 24.96 per cent to $551.7 billion.
The trade deficit during April-December 2022 period widened to $218.94 billion as against $136.45 billion in April-December 2021.
“The export outlook may remain flat in the coming year if global growth does not pick up in 2023, as indicated by many forecasts,” the survey said.
In such cases, it said, diversification in export destinations and the product basket through free trade agreements (FTAs) would be useful to enhance trade opportunities.
At times when the base (global growth and global trade) is not growing, export growth will have to come predominantly through market share gains, it noted.
“In turn, that comes from the focus on efficiency, productivity, technology, and innovation. That game has to be lifted. Governments can try and open markets through FTAs. But, to take advantage of that is in the hands of private sector participants,” it added.
The World Trade Organisation (WTO) has projected a growth of only 1 per cent in global trade in 2023.
In December 2022, key export sector have recorded negative growth and that include engineering goods, gems and jewellery, leather goods, pharma, carpet, and petroleum products.
“The slowdown in Indian exports is inevitable in a slowing global economy, characterised by slowing global trade,” it said.
India’s external sector has been impacted due to volatility in global commodity prices; tightening international financial conditions; heightening financial market volatility; reversal of capital flows; currency depreciation, and looming global growth and trade slowdown.
“However, it has been able to face these headwinds from a position of strength on the back of strong macroeconomic fundamentals and buffers,” it added.
The government is expecting that measures like announcement of National Logistics Policy, and recently implemented FTAs (UAE and Australia) would address the external frictions by creating opportunities for exports.