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Indian exports optimistic despite downtrend


Indian exports optimistic despite downtrend

India’s upbeat export figures weren’t immune to the pandemic outbreak and Russo-Ukrainian conflict. Last month, exports recorded a decline of 1.15 per cent year-on-year. The worst hit were cotton yarn, fabrics and handloom products which experienced negative growth of nearly 33 per cent.

Weak demand from traditional markets

Ajay Sahay, Director General and CEO, Federation of Indian Export Organisation points out, the trend being witnessed now is, receiving orders for low-value products because of high inflation. He believes, going ahead, we may see a little impact on the value of these products but volumes exported will remain intact. Stable volumes will have a positive impact on employment and job creation. This certainly signals practical optimism as sector experts feel India has pulled off a speedy post-pandemic recovery before Russia declared war on Ukraine. Sahay, also says, weak demand from India’s some of the biggest export markets, such as China, the European Union and the US, due to a slowdown in these regions and high inflation, as well as export restrictions on some commodities, has resulted in export drop.

Confidence on FTAs for future growth

As we moves towards the festive season at the end of the year, imports from the West are expected to increase. Additionally, the upcoming free-trade agreement with UK is another growth opportunity the sector is looking forward to. Apart from reducing tariffs, the FTA also looks at lowering non-tariff barriers, particularly technical barriers to trade around rules of origin, investor protection and IPR.

The Indian government is currently engaged in multiple FTA deals, prominent ones being the EU and Canada. It must be noted that the EU is the second largest trading bloc after the US. India’s exports to the EU jumped 57 per cent in 2021-22 to $65 billion. FTA negotiations are part of India’s broader strategy to forge balanced trade agreements with key economies and revamp existing trade pacts to improve trade and investment.

The recently-signed FTAs with the UAE and Australia are reaping good yields for Indian exports. The deal with Australia has 95 per cent of Indian merchandize duty free. Similarly, the figure stands at 90 per cent of exported merchandize to the UAE exempt from duties.

The department of commerce has revealed figures that clearly indicate that India’s export forges forward, growing from strength to strength. In March 2022, Indian exports recorded a whopping $40 billion plus, the largest figure for any given month. Whilst the department of commerce has set a target of $400 billion in merchandize exports for 2021-22, Indian exports overreached the target with total value of $418 billion.

India has moved away from exporting primary goods and is focused on value-added items instead. Local manufacturers who are the backbone of the ‘Make in India’ initiative have been the direct beneficiaries of the current sweep of FTAs. With each FTA signed, the scenario keeps getting more favorable for India.


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