The firming up of global economic recovery during 2018 has improved trade prospects for the world economy. The International Monetary Fund’s (IMF) World Economic Outlook (WEO) April 2018 report has projected a global growth rate of 3.9% during 2018-19. World trade volume went up from 2.3% in 2016 to 4.9% in 2017 and is expected to grow by 5.1% during 2018, as per the report.
With a positive global economic outlook during 2018-19, Indian trade prospects have improved and Indian exports are also likely to continue on an upward trajectory during the year.
After a period of volatility on account of sluggish global conditions, Indian exports recovered during 2017-18. Total merchandise exports from India increased from US$ 275 billion in April-March 2016-17 to US $303 billion in 2017-18 and registered a growth rate of around 10%. USA was India’s top export market with total merchandise exports valued at US$ 47.9 billion for the year.
Top Export Destinations Apr-March 2017-18Source: Ministry of Commerce and Industry, Government of India Exports in US$ millions
Other top export destinations for India during the same period included UAE, Hong Kong, China and Singapore. The combined exports to these five markets from India amounted to US$ 114 billion, adding up to about 38% of India’s total exports.
Growth Rate of Exports to Top Export MarketsSource: Ministry of Commerce and Industry, Government of India Exports in US$ millions
China, USA and Singapore were the fastest growing markets in terms of growth rate of exports.
The top five commodities of export during 2017-18 were petroleum products with a share of more than 12% in the total figure, followed by pearls, precious, and semiprecious stones; drug formulations, biologicals, etc.; gold and other precious metal jewellery and iron and steel. Iron and steel grew the fastest at a rate of 29% over the previous year, followed by petroleum products which expanded at 18%.
Top 5 Export Commodities as a Share of Total Exports (%)Note: Total Exports valued at US$ 303 billion during 2017-18 Source: Ministry of Commerce and Industry, Government of India
India’s services exports also grew positively during the year and ended at US$175.31 billion. After contracting in 2015-16, services exports recovered during 2016-2017, growing at 5.7% and further improved during 2017-18, growing at the rate of 17.63 % over last year. The combined value of Indian services and merchandise exports stood at US$ 478 billion for the year.
While the outlook for Indian exports is fairly optimistic, the rising global tendencies towards protectionist policies such as increased trade barriers and tariffs is a potential challenge for the country. Therefore, policymakers need to be watchful and devise appropriate strategies to deal with such changes in the international trading system.