India’s exports have maintained a consistent upward trend over the past few months, pointing to a resurgence in global economic activity, as well as domestic growth. According to commerce ministry data, exports rose 25.28 per cent to $34.50 billion in January, thanks to rising exports of refined petroleum products, gems and jewellery as well as engineering goods. Overall exports have increased by 46.73 per cent, to $335.88 billion during April 2021-January 2022, from $228.92 billion in the corresponding period of the previous year, leaving India well-placed to achieve the exports target of $400 billion for the year ending March 2022. However, it must be noted that India’s domestic manufacturing and consumption is also quite import-intensive. The data also shows a widening trade deficit for the April-January 2021-22 period, which has risen to $159.87 billion from $75.87 billion in the same period a year ago. It must also be noted that compared to an estimated world trade of $28 trillion, India’s share is very modest. Even the government’s long-term goal of $2 trillion in exports, with merchandise and services exports contributing equally to the figure, will not make India a major player in global trade. With a current share of world trade of just 0.55 per cent, India is not a major exporter by any measure.
Given that its system of export subsidies have largely failed to deliver the goods, and have led to frequent disputes at WTO, it is time the government shifts its focus to providing better market access to Indian producers of goods and services and removes the logistics and tax bottlenecks currently rendering them uncompetitive. Given the moribund state of multilateral trade mechanisms like the WTO, and challenges of joining new trade groupings sponsored by China or the US, it must focus on negotiating favourable FTAs with target nations to ensure genuine two-way access for both goods and services.
