India’s merchandise export performance of $400 billion-plus in 2021-22 provides some cause for cheer in an economy that is battling anaemic consumer and investment sentiment. An export growth of close to 30 per cent over a pre-Covid year (2019-20) — and about 46 per cent over 2020-21 when the economy had tanked — is creditable because it has bucked global headwinds, and is broad-based in terms of range of products and destinations. As regards the product-basket, the boost is led by petroleum but is backed up by agri goods, chemicals and engineering. Petroleum exports (15 per cent of exports by value now) have more than doubled over 2020-21 to about $60 billion from $26 billion, and by 50 per cent over 2019-20. Agri-exports too have done well in 2021-22, as pointed out by the Minister of State for Commerce Anupriya Patel in the Lok Sabha on Wednesday. She said that agri-exports were up 25 per cent in the first 10 months of 2021-22, crossing $40 billion or 10 per cent of India’s total exports. The rise, led by wheat, is likely to be a feature of FY23, even as marine products, rice, sugar and spices too have done well. Engineering goods (26 per cent of the export basket) and chemicals (7 per cent) have performed strongly, with a diverse market base. Pharma exports (6 per cent of all exports) were down from last year when Covid-related exports were of a high order, but still higher than pre-pandemic levels. That said, commodities as a whole have played a huge role in the export spurt, not least because of the price rise worldwide. Analysts have observed that in the case of petroleum products, aluminium, cotton and sugar, the increase is price-driven rather than quantity-driven.

India’s goods have made their presence felt beyond its major markets, namely the US (17 per cent of total exports), China and UAE (6-7 per cent each). Analysts have observed that exports to Turkey, Belgium, Indonesia, Bangladesh, Australia, Netherlands, Italy, Brazil and South Korea, among others, have risen sharply. But the question is whether the export performance will sustain itself. As Economic Survey 2021-22 observes: “Sharp recovery in key markets; increased consumer spending; pent up savings and disposable income due to announcement of fiscal stimulus by major economies; global commodity price rise and an aggressive export push by the government have bolstered exports in 2021-22.” It remains to be seen whether the tightening of fiscal and monetary policy in the US and EU, in the wake of rising inflation, impacts India.

The Centre has taken steps in terms of improving logistics, trade facilitation and performance linked incentives that could help in keeping exports going. India’s export thrust must go beyond traditional markets both in geographical and product terms; it is in recognition of this reality that India is pursuing trade pacts worldwide. Its PLI schemes will work well if they are linked to free trade pacts. India can emerge as a global player in EVs and fuel cell vehicles. Agri-tech should be promoted so that phytosanitary issues are kept at bay.

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