AT a time when the global economy is witnessing a slowdown, can India achieve the $2-trillion export vision, as underlined by the Foreign Trade Policy 2023? According to Director General of Foreign Trade (DGFT) Santosh Kumar Sarangi, the Union Government is looking forward to collaborating with states, district governments, Indian missions abroad and various government departments, to achieve the foreign trade goals.
The country will have to undertake a slew of measures to reach the target by 2030, including an increase in the manufacturing of electronic and engineering goods, he said.
Remission-based regime Addressing industry members at the maiden India Business and Trade Conclave 2023 held in New Delhi late last month, Sarangi emphasised that India is moving away from an incentive-based regime to a remission-based regime. It was a move towards more digital enablement, which will facilitate trade, he stated.
In terms of emerging areas, the DGFT said there is a focus on high-end technology products and SCOMET items, ensuring that India’s export regime is streamlined and aligned with some of the international agreements. This is to also ensure that high-technology products are able to get an export market.
E-commerce, districts as export hubs and export clusters to facilitate exports are some of the broad areas on which the Foreign Trade Policy 2023 has been launched.
The SCOMET list classifies items into nine distinct categories. These are Special Materials and Related Equipment, Material Processing, Electronics, Computers, Telecommunications, Information Security, Sensors and Lasers, Navigation, and Avionics, Marine, Aerospace and Propulsion.
Bullish on target
Incidentally, India reached its highest export of $676 billion in the financial year 2021-22. It reached $767 billion in 2022-23, with merchandise trade of about $450 billion and services trade of about $326 billion.
Sarangi exhibited optimism about achieving the target of $2 trillion given the growth rate of India over the years, though it is certainly not an easy task.
In order to achieve the target, he suggested that India needs to relook at its product as well as an export basket. Among the top 20 markets, there are only eight markets where we run a trade surplus and 12 markets, where we run a trade deficit.
Thus, according to him, India will have to work on its manufacturing competitiveness and take advantage of Free Trade Agreement (FTA) negotiations.
FTAs come in force
India’s FTAs with the UAE and Australia have recently come into force – further increasing India’s competitiveness as a manufacturing and export powerhouse. Discussions are currently going on for entering into similar agreements with other big economies like the UK, the European Union and Canada.
Meanwhile, while exports see a record number, merchandise exports have actually been contracting in the last few months. While India has an advantage when it comes to services exports, experts say that the Government should continue to focus on merchandise exports.
A recent report by Standard Chartered projected India’s merchandise export growth to surpass the global average, reaching $773 billion by 2030. The report suggested that exports by metals and minerals, chemicals and pharmaceuticals, and textile and apparel sectors will show the biggest increase in the coming years.
The higher growth rate is anticipated to increase India’s share in global exports from the current 1.8 per cent to 2.37 per cent.
Goods trade growth
The global growth in goods trade is expected to average five per cent until 2030, reaching $32.6 trillion, while India’s annual growth rate during that period will be 7.5 per cent.
The Standard Chartered report identified Turkey, Vietnam, and Indonesia as the areas where India’s exports will experience the highest growth. However, the United States, mainland China, and the UAE will remain the top destinations for India’s goods exports in terms of volume, it said.
In mid-April, the Ministry of Commerce and Industry projected India’s overall exports to scale new heights, growing at 13.84 per cent during FY 2022-23. The ministry statement said that merchandise exports have registered the highestever annual exports of $447.46 billion with 6.03 per cent growth during FY 2022-23 surpassing the previous year (FY 2021-22) record exports of $422.00 billion.
Services exports lead the overall exports growth and are projected to set a new record annual value of $322.72 billion with growth rate at 26.79 per cent during FY 2022-23 over FY 2021-22.
