Merchandise exports to seven of the top 10 markets trailed the official targets in FY22 but India still managed to not just beat its ambitious goal of $400 billion but achieved record outbound shipments of $422 billion last fiscal, as despatches to many other economies more than made up for the shortfall.
It reflects deeper market penetration by Indian exporters and suggests the country’s long-attempted diversification strategy has started to pay off.
Data sourced from the DGCIS on the top 40 markets suggest exports to the UAE, China, Hong Kong, Singapore, UK, Germany and Nepal were in the range of 79% to 99% of the respective targets for FY22 (see chart). Exports to Malaysia and Russia faltered more dramatically, having hit just 77.6% and 78.5%, respectively, of the full-year targets.
Of course, exports to all these markets still surpassed the FY21 level when the pandemic had caused massive disruptions to the global supply chains and resulted in a 6.6% year-on-year drop in India’s outbound goods shipments to $291 billion.
However, a strong rebound in exports to other key markets across continents – including the US (111.1% of the target), Bangladesh (129.4%), the Netherlands (115.3%), Belgium (120.5%), Saudi Arabia (118.1%), Indonesia (124.1%), Turkey (117.1%), Italy (115.4%), South Korea (144.7%) and Brazil (124.6%) — boosted the overall number and highlights the broad-based nature of the surge.
Interestingly, exports to Australia and Taiwan, who have been seeking to diversify away from a belligerent China, were as high as $8.06 billion and $2.7 billion, respectively — or 165.9% and 142.1% of the respective targets for FY22.
On the whole, at $364 billion, exports to the top 40 markets beat the target of $355 billion set for them.
Importantly, India’s exports to China remained flat at $21.2 billion but imports from the neighbour jumped 44.4% to $94.2 billion, leading to a record trade deficit of $73 billion, or about 63% of the bilateral trade. This brings to fore the urgency of addressing massive inflows of low-grade products from Beijing at cheaper rates, a senior industry executive said.
In an unusual move, the commerce ministry last year fixed export targets for each of the top 40 markets, instead of zeroing in on just a few economies or setting only a full-year goal.
The ministry then followed it up with regular meetings with stakeholders and overseas missions for targeted interventions, following directions from Prime Minister Narendra Modi, to enable exporters to better cash in on a global industrial resurgence.
“If we could cross a lofty target in FY22 despite lower-than-expected growth in seven of the top ten markets, it just suggests that once we further consolidate our position in these traditionally large markets, we can achieve even higher exports. Moreover, exports to some other economies were more than encouraging. This also means the focus on diversification is yielding results,” an official source told FE.
Before hitting $422 billion in FY22, merchandise exports fluctuated between $250 billion and $330 billion since FY11; the previous highest export of $330 billion was achieved in FY19. However, having successfully weathered the damage caused by two Covid waves, Indian exporters face fresh uncertainties now from the Russia-Ukraine war that has disrupted the already-burdened global supply chains and caused the shipping costs to skyrocket.
Still, the silver lining is that, despite these odds, goods exports in April grew 30.7% to breach the $40-billion mark, a record for the first month of any fiscal.
