Both merchandise and service exports are booming

Throughout history, it has always been tough for a country to stand out in terms of policies and other aspects; this is what makes geography a civilisational state. The problem is more exacerbated in the hyper globalized world order. But Indians are known for just getting things done. India’s latest exports’ numbers amidst global slowdown are living examples of the phenomenon.

Both merchandise and service exports are booming

Official numbers are out now. India’s exports continue the upward trajectory of sailing new heights. During the five months period of April and August 2022, India exported Made-in-India merchandise worth of $193.51 billion. This is a remarkable rise of 19.72 per cent over the same period last year. Not only products, India’s service sector exports have also witnessed a significant rise for the same period.

Compared to $96.03 billion worth of exports during the same period last year, India exported services worth $118.30 billion. The remarkable year-on-year gain of 23% reflects India’s rapid progress toward developed-country status.

The more competitive a country’s service sector is, the more likely it is to equal the top position in the human development charter. The rise of the service industry is reflected in a reduction in India’s trade imbalance in the service sector.

Breakdown of the numbers

Even if we just take August, the exports numbers for both service and merchandise is quite encouraging to say the least. In YoY terms, service sector exports grew by 10 per cent, while Merchandise exports grew by 1.6 per cent to $33.92 billion in August 2022. Combined, India’s total export jumped by 6.75 per cent in YoY terms in August.

Product wise breakdown shows, India’s tobacco exports witnessed maximum increase by 76.4 per cent in YoY terms. Oil Meals have has come in second with a 73.7 per cent increase. India’s emphasis Aatmanirbharta in electronic goods has also started to pay off, since its exports increased by 50.4 per cent. On the other hand, India’s growing dominance in the WTO has witnessed in a 43.4 per cent rise in rice exports.

Modi government’s push towards exports

The numbers are testament to PM Modi’s emphasis on Aatmanirbhar Bharat and Make-in-India. Make-in-India has been Modi government’s mantra right from the time PM Modi took oath as Prime Minister. Since each product can’t be used by 1.4 billion Indians, export becomes a necessity. Additionally, it also increases our soft power.

Under the Foreign Trade Policy 2015-20, Nirmala Sitharaman led Ministry of Commerce and Industry (MCI) has liberalised norms for export. MCI introduced two new schemes namely, ‘Merchandise Exports from India Scheme (MEIS)’ for the export of specified goods to specified markets and ‘Services Exports from India Scheme (SEIS)’ for increasing exports of notified services.

Involvement of whole of polity

The Export Promotion Capital Goods (EPCG) scheme under the FTP focussed on phasing out import requirements for capital goods. Specific MSME clusters were identified for increasing exports, simultaneously catalyzing employment generation and increasing value addition.

Efforts were also put in to diversify the composition of India’s export basket. For diversification, making states compete is important since every state has expertise in different sector.

Also Read: From importers to exporters, India’s game-changing journey in the defence sector

Cooperative and mutually competitive federalism

A wholesome export preparedness index was launched by NITI Aayog. Under this index, states are judged on four pillars which include policy, business ecosystem, export ecosystem and export performance.

The index also has eleven sub pillars consisting of export promotion policy, institutional framework, business environment, infrastructure and transport connectivity, access to finance, export infrastructure, trade support, R&D infrastructure, export diversification, and growth orientation. Gujarat has been a top notch performer till now.

Rise in India’s economic competitiveness

The competition among states has resulted in the overall increase in the competitiveness of India’s products as well. According to the Institute for Management Development, India has jumped 6 positions in the annual world competitiveness index.

It has been catalysed by healthy competition among states, as India’s domestic economic competitiveness has risen from 30th to 9th position in a year. Furthermore, the Modi government’s labour rules enabled India’s labour competitiveness rise from 15th to 6th place.

Role of PLI in exports

However, the rise in rankings took some time and big changes were noticed only after the PLI scheme worth of Rs 1.97 lakh crores was introduced. Since then, India’s share in the percentage of total global exports has witnessed an increase.

In the financial year 2021-22, India registered its highest export in value terms. The statistics on India’s burgeoning exports has been crystal clear, with double-digit growth being recorded in value terms of year on year exports. Aside from export-boosting policies, a part of the credit also goes to MCI for not favoring trade deals like RCEP.

India’s export figures are coming at a time when economies across the world are witnessing slow down, with the United States technically entering into recession. People’s consumption capacity all across the globe is declining, yet they are still willing to buy Indian products. It speaks volume about our economy.