Even as the US economy is predicted to slip into recession, world debt crisis intensifies, India’s exports touch $770.18 billion largely with strong services exports of 27 percent. It’s significant in the post pandemic situation indicating not an unlikely rebound. India exceeds the target by $20 billion.
However, one of the aspects of diplomatic and political concern is that imports from China have not come down. These touch $98.51 billion against $94.57 billion in the previous year. On the contrary, India’s exports to China fell to $15.32 billion from $21.26 billion a year ago. It is a negative growth of nearly 28 percent. In reality, it has not helped the country much. This dependence on China is not easy to reduce.
Its impact on international politics and India in particular in terms of border disputes is not reflected in actual trade relationship. The oft political statement is that India’s purchases help China spend it on the borders against India. Trade figures do not seem to be concerned about it whether China renames a plethora of names of places in Arunachal or not. Those nationalist views and actual trading definitely are not on the same page.
Perhaps at the political and diplomatic level the discussions are not easy to deal with given the actual matters of exports and imports. So, whatever may happen at the borders is treated differently when it comes to merchandise in the international market. These will remain good election issues so far imports from China are concerned. But the fall in sales or exports to China by a 28 percent could be interpreted as a careful action taken by China.
One of the critical aspects is that of the mobile phone. Apple now triples its production from India to $7 billion. It makes almost 7 percent of its phones through expanding its partners in India. As tension between Washington and Beijing escalates, Apple is shifting its bases from China rather fast. The company exported $5 billion worth products made in India as per the support to all manufacturers assured by Prime Minister Narendra Modi. Apple might be making one-fourth of its global production in India by 2025.
Imports of electronic goods from China have seen a year-on-year decline of around $2 billion in 2022-23 (April-February). Import share from China in electronic goods has also declined from 48.1 per cent in 2021-22 (April-February) to 41.9 per cent in 2022-23 (April-February). Imports have been shifted towards Singapore, South Korea and Vietnam.
A significant fall in share from China was seen in imports of fertilizers — from 21.9 per cent in 2021-22 (April-February) to 13.9 per cent in 2022-23 (April-February) and this accounts for around half a billion fall in imports from China. A major chunk of the demand for fertilizers has shifted toward Russia where import share has increased from 5.21 per cent to 17.2 per cent in 2022-23 (April-February).
The rising trade figures have helped India surge its foreign exchange reserves to $ 600 billion after a gap of several months. But global slowdown affected merchandise trade. It has grown just over 6 percent. This is reflected also in the domestic manufacturing. It is on a see-saw mode going up marginally with a subsequent fall. Global demand is low and Indian exports do not have a wide range to offer.
In 2021, India was the number six economy in the world in terms of GDP, the number 14 in total exports, the number 11 in total imports, the number 137 economy in terms of GDP per capita and number 41 most complex economy, according to the Economic Complexity Index (ECI).
The top exports from India are refined petroleum $49 billion, diamonds $26.3B, packaged medicaments $19.2B, jewellery $10.7B, rice $10B, and exports to the US $71.2B, UAE $25.4B, China $23.1B, Bangladesh $14.1B, and Hong Kong $11.2B.
The present trade deficit is $122 billion. The country’s trade deficit in 2021-22 was $83.53 billion. It is being defended by the Commerce Ministry as it reflects the country’s growing demand despite the global slump. Officially it is also stated that India’s import dependence on China has reduced from 15.43 percent of the total merchandise to 13.79 percent.
Electronic goods’ import shares in India’s total merchandise imports have declined to 10.82 per cent in 2022-23 from 12.02 per cent in 2021-22. Machinery, electrical and non-electrical, gold, organic and inorganic chemicals, pearls, and precious and semi-precious stones are among the other items whose share has seen a decline.
“Based on services exports estimates and actual numbers of goods exports, we have surpassed our target of $750 billion to hit $770.18 billion. Growth is significant as there were recessionary conditions elsewhere, despite global headwinds, we have not only achieved the target, but also surpassed it,” says Commerce Secretary Sunil Barthwal.
India’s exports have increased substantially from countries like Russia (369.44%), Indonesia (62.8%), Saudi Arabia (23.31%), Singapore (24.43%) and Korea (21.46%).
Petroleum products export share in India’s total merchandise exports has increased from 15.99 per cent in 2021-22 to 21.12 per cent in 2022-23. Electronic goods export share in India’s total merchandise exports has increased from 3.71 per cent in 2021-22 to 5.27 per cent in 2022-23. Smartphones export stood at $9.31 billion during April-February 2022-23.
“The impact of economic slowdown in major advanced economies has been visible in global trade. However, India has still managed to minimise the impact by taking several policy measures such as expanding the rupee trade, roll-back of export duty on specified steel products, and easing procedures,”says the EEPC India Chairman Arun Kumar Garodia.
The rupee trade with 18 countries is stated to be positive though now the logistics are being put in place. According to the government there are many issues that are being addressed. The rupee has one advantage that it could be exchanged with other currencies. But the countries also want to observe the level of exposure to each other. Russia is one of the oldest partners in rupee trade. But it had earlier faced problems with excess rupee reserves.
India, in the course of time hopes to manage its merchandise and other trades more strategically to take a leap in world affairs. –INFA