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India’s dismal export performance in the past two years owing to lacklustre global demand has forced the government to consider pruning the goods and services export target of $900 billion fixed for 2020.
The mid-term review of the five-year foreign trade policy, to be announced in 2017, is likely to set a much lower target, which will be determined after sectoral consultations.
“The original plan was to double goods and services exports from about $450 billion in 2015 to $900 billion in 2020,” a Commerce Ministry official told BusinessLine .
“But almost two years down the line, we do not see this happening as exports have been continuously falling except for three months of marginal growth this fiscal,” the official added.
The foreign trade policy was announced in March 2015 with the objective of increasing India’s share of world exports from 2 per cent to 3.5 per cent.
The government’s demonetisation drive, too, is likely to have a dampening effect on export numbers over the next few months as exporters find it difficult to pay workers’ wages and buy raw material, given the cash withdrawal limit of ₹50,000 per week, the official added.
“While the global sentiment remains weak, the US Fed rate hike and demonetisation have added to exporters’ concerns, and will be reflected in the trade data in the coming months,” according to the Federation of Indian Export Organisations.
The mid-term review of the trade policy will be announced in September 2017. “Whether our new target is $500 billion or some other number will depend on the deliberations at the sectoral meetings. We will also examine ways to accelerate sectoral growth,” the official said.
The focus in such challenging times should be on marketing with proactive support from the government, FIEO added.
Exports of goods and services declined in 2015-16 due to shrinking global demand. Exports fell across sectors, including labour-intensive ones, such as textiles and leather.
In the current fiscal, exports fell further in at least five of the eight months. Goods exports in April-November 2016-17 were $174.8 billion, about the same level as in the same period last year.
“Exports fell in 2016-17 despite a low base effect from a sharp fall in shipments last year. Although the numbers have started improving, it is at best a marginal rise; we cannot expect a turnaround,” the official said.
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