New Delhi, January 31

India’s goods exports are likely to remain flat’ in FY24 if global growth does not pick up in 2023 as indicated in many forecasts, the Economic Survey 2022-23 has stated.

“The slowdown in Indian exports is inevitable in a slowing global economy characterised by slowing global trade,” it said.

Making a case for export promotion measures, the survey noted that these would nurture the comparative advantages that Indian exports embody. The latest Free Trade Agreements (FTA) with the UAE and Australia will create opportunities for exports, but it is also important to focus on productivity, efficiency and innovation, the srvey advised.

The flat export performance projected for the coming fiscal is of additional concern for the economy as, even in the current fiscal, the government has indicated that exports are unlikely to show a major improvement over the past year.

In FY22, exports had touched an all-time high of $422 billion, posting a growth of over 40 per cent, compared to the previous fiscal. The strong export performance of FY22 continued somewhat in the first half of FY23, with the export of goods and services as a share of GDP touching the highest since FY16.

“However, the performance began to wane in the first half itself as the year-on-year growth of exports declined from Q1 to Q2 due to persistently high inflation and rising interest rates in the advanced economies,” it said.

On the brighter side, sectors such as drugs and pharmaceutical, electronic goods, engineering goods and organic and inorganic chemicals, that made significant strides in exports in FY22, have sustained their growth momentum despite the global headwinds in the first half of FY23, the Survey observed.

On rising imports, which is contributing to the widening trade deficit, the survey said that the recent softening in global crude oil prices augurs well for India’s POL imports. However, non-oil, non-gold imports, which are growth-sensitive, may not witness a significant slowdown as Indian growth continues to be resilient.

While stating that India’s FTAs with the UAE and Australia would create more export opportunities, the survey cautioned that that there may not be a sudden or significant increase in trade after an FTA is signed. “The trade balance would shift only gradually and may also turn out to not be in favouur of each partner, depending on a host of factors..,” it said.

The survey was optimistic that going forward, the expected easing of crude oil prices, the resilience of net services exports and buoyant inward remittances would result in lower current account deficit (CAD) during the remainder of FY23 and is expected to be within sustainable limits. 

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