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India’s merchandise exports in the current financial year are expected to top the levels achieved in 2013-14 for the first time in five years, thanks to a little help from the elevated petroleum product prices.
Estimates are that the value of India’s exports will rise above $314 billion, as it had already earned $298 billion between April 2018 and February 2019.
However, the composition of the basket of goods that helped India earned over $300 million in 2013-14 is significantly different now, with the share of petroleum products declining and that of manufactured items rising.
Top earner
Yet, petroleum products continue to be the top earner of foreign exchange, although total earnings are lower than five years ago, an outcome of volatile global prices. Crude and product prices, although elevated, are far lower than it was five years ago. Therefore, its share in the export basket has declined to 14.8 per cent of the earnings in 2018-19, between April and January, the period for which comparable disaggregated data is available from 20.4 per cent in the corresponding period of 2013-14. In contrast, the share of electric machinery and equipment as well as aluminium and aluminium products in the export basket has doubled and tripled, respectively, since 2013-14.
Electric machinery and equipment now account for 2.6 per cent of the export basket, up from 1.2 per cent in 2013-14 and aluminium and its products account for 1.8 per cent, up from 0.6 per cent.
At the commodity group level, contribution of chemicals and related products recorded a jump in export earnings from 9.8 per cent in ten months of the 2013-14 to 13.2 per cent in the current year, helped by a jump is export of agro and organic chemicals mostly. Drugs formulations and biologicals, which are also categorised as chemicals, continue to be a key export commodity.
Significant changes are also seen in the direction of trade, even though the US continues to be the top destination of exports and China the top source of imports. The US is now a more important destination for India than it was in 2013-14, with 16 per cent of the exports headed there now compared to 12.5 per cent five years ago.
Bangladesh and Nepal are also among the top ten destinations for India’s export.
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