Riding on resurging global growth after two muted years of the Covid-19 pandemic, India surpassed $400 billion in exports in FY22, an all-time high for the country, comfortably higher than the five-year average of $300 billion before coronavirus struck. According to the government, the exports stood at $417 billion, which is roughly $48 million every hour.
Which sectors led this growth?
Data from the Ministry of Commerce and Industry for the fiscal year 2021-22 showed the following sectors coming out ahead of the others in India's exports story:
1. Engineering goods registered a 50 per cent growth in exports, at $101 bn in FY22. This is mainly due to the benefits that the sector enjoys due to various trade agreements India has with other countries, a report by The Economic Times explained. It is expected to continue its rise in steel, auto components and medical devices and India's push for Make in India.
2. Petroleum products contributed in a major way to India's exports, with crude oil prices rising due to the pandemic and made worse by geopolitical tensions due to the Ukraine war. India exports $55.5 bn worth petroleum products, a whopping rise of 150 per cent over last fiscal year.
3. Gems and jewellery made up $35.3 billion of India's exports in FY22. With the reduction of import duty on cut and polished diamonds in this year's budget, this is only going to rise. The Emergency Credit Line Guarantee Scheme (ECLGS) launched by the government as a response to Covid-19 for MSMEs will also help business in this sector. Ninety per cent of gems and jewellery sector comprises of MSMEs.
4. Agriculture exports were buoyed by the government's push to meet global demand for food amid the pandemic. India exports rice worth $9.65 bn, the highest among agricultural commodities. Wheat exports also saw a 288 per cent rise, while dairy products saw a 96 per cent rise. With the Ukraine war, wheat exports are likely to rise more in the estimates for FY23.
5. Inorganic and organic chemicals and electronic goods also contributed to India's export surge.
Where did this surge come from?
After two years of muted growth, global trade touched a record $28.5 trillion in 2021, a fact that supported India's export surge.
Relaxation of Covid-19 restrictions across the world, also in India with cases remaining under 10,000, demand and increasing commodity prices are responsible for the uptick in global trade.
Indian exports were supported by several production-linked incentive (PLI) schemes introduced in many sectors including mobile manufacturing, electronic and textile products. Local manufacturing boomed which helped India compete in the global markets. The government also launched an interest equalisation scheme to make credit available for cheaper exporters in India.
Amid surging inflation, it must be noted that India's ambitious exports notwithstanding, its imports were higher, thus increasing the trade deficit.