Encouraging milestone: Peppystores editorial on India’s record in foreign shipments

Business

In addition to stopgap measures such as allowing rupee-ruble trade, India needs to speed up free trade deals

In addition to stopgap measures such as allowing rupee-ruble trade, India needs to speed up free trade deals

TThe center’s announcement that India’s merchandise exports have already surpassed the target set for this fiscal year, with overseas shipments topping a record $400 billion as of March 21, brings much-needed cheer to an economy still struggling , to recover from the bloody effects of the COVID -19 pandemic. The export recovery, driven by the pandemic-induced slump in global demand last fiscal year, is particularly encouraging as the key value-added sectors of tech goods and apparel have performed well this year. In particular, technical goods saw a year-on-year growth of nearly 50%, while ready-made garments saw a rise of more than 30% in the April-February period, according to preliminary data from the Department of Commerce. However, in terms of the sheer magnitude of the rise, petroleum products were the standout performers as the global surge in oil prices boosted the dollar value of overseas shipments of goods produced at India’s refineries by 150% in the first 11 months of the fiscal year. The fact that the export growth has been achieved against a backdrop of ongoing logistical challenges, including container shortages and port congestion that have pushed up freight rates, is commendable and reflects the government’s concerted efforts in coordination with industry and the country’s foreign missions contrary . Interestingly, Trade and Industry Minister Piyush Goyal specifically noted the role played by India’s embassies and envoys in exploring new opportunities for Indian products, and if current export momentum is to be sustained in the years to come, the diplomatic corps will be needed to play their role expand in trade promotion.

Still, the jubilation at reaching the milestone must be tempered by the recognition that numerous challenges remain on the trade front. Imports have outpaced exports this year, nearly doubling the April-February trade deficit to more than $175 billion. The gap is also wider than it was in the year before the 2019-2020 pandemic, pointing to the urgent need to increase the pace of export growth if the deficit is to be significantly reduced. While global commodity price inflation has certainly helped boost the value of both exports and imports, so has the fact that project goods were the only imported items among the 30 major categories listed by the ministry that received during the 11 month -Period dwindled causes for concern. The lack of overseas purchases of capital goods for new projects is a clear indicator that private Indian companies are still cautious about making new investments given the lack of momentum in private consumption. With the war in Ukraine and sanctions against Russia now posing new problems for exporters who want to ship goods not only to these countries but also to other markets in Europe, policymakers are having to think about stopgap measures such as enabling the rupee-ruble -Trade go beyond and the ongoing negotiations are accelerating the many free trade agreements in order to dismantle at least part of the tariff walls.

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