AIR Spotlight: Rising Indian Exports

AIR Spotlight is an insightful program featured daily on the All India Radio News on air. In this program, many eminent panellists discuss issues of importance which can be quite helpful in IAS exam preparation.

This article is about the discussion on: Rising Indian Exports.

Participants: 

1. A.K. Bhattacharya – Economic Analyst
2. Rangabhashiyam – AIR Correspondent

Context – Despite global headwinds, India’s goods and services exports are expected to touch $750 billion in the year to March 31, 2023, surpassing record exports in 2021-22 ($676 billion). The GoI is emphasising its focus on promoting overseas trade through Indian diplomatic missions.

Introduction

• India’s robust export performance has made a significant contribution to its economic growth in recent times. Despite global headwinds, India’s overall export (merchant and Services) grew at 17.33% to $640 billion during April 2022 – January 2023 compared to $547 billion during the same period last year. India’s exports, goods and services are expected to touch $750 billion in the year to March 31, 2023.
• Sectors which would help in promoting exports include manufactured goods, agri products, labour-intensive items, and high-quality products.
• Services exports contribute to about 40% of the total exports and have been growing at a faster rate than merchandise exports.
• India’s export performance is the result of well-designed trade policy interventions and their effective implementation to create a conducive ecosystem for the promotion of exports. 

Also read: Exports and Imports Decline for January 2023

Export Promotion Councils 

The Export Promotion Councils and the Commodity Boards play an important role in export promotion. They provide market intelligence, explore new markets and destinations, arrange trade fairs and buyer-seller meets, handhold exporters and work closely with Ministries/Departments. 

• They act as an intermediary between the government and the export industry and are critical in formulating the foreign policies of the country.
• These councils are registered as non-profit organisations under the Companies Act/Societies Registration Act. EPCs perform both advisory as well as executive functions. 
• Some examples of EPCs are – the Agricultural and Processed Food Products Export Development Authority (APEDA), the Gem and Jewellery Export Promotion Council  – GJEPC, the Jute Manufacturers Development Council (JMDC), etc.
• In order to boost India’s exports, appropriate measures should be taken to strengthen and make EPCs more target oriented. 

India and Free Trade Agreements (FTA)

It is a pact between two or more nations to reduce barriers to imports and exports among them.

• India – UAE Comprehensive Economic Partnership Agreement (CEPA) – CEPA is expected to increase the total value of bilateral trade in goods to over US$100 billion and trade in services to over US$ 15 billion within five years. The historic India – UAE CEPA came into force in May 2022.
• India – Australia Economic and Cooperation Trade Agreement (IndAusECTA) – the agreement came into force on December 29, 2022. India has achieved the unique distinction of operationalising two trade agreements in 2022. 
• India needs to get into more agreements with other nations (UK, EU), and also become members of some regional trade arrangements. By doing so, India’s ability to take advantage and get plugged into the global value chains would be easier.

Read more about free trade agreements in the linked article.

Production Linked Incentives (PLI) Scheme 

The PLI Scheme has transformed India into a manufacturing hub and has also curtailed its burgeoning trade deficits in electronics.

• With an outlay of over Rs 2 lakh crore, the Production Linked Incentive scheme was launched in March 2020 and targeted the electronic sector initially. As a result, electronic manufacturing attracted a massive investment and its exports have grown by over 55% annually. 
• It was later extended to 14 manufacturing sectors. However, the PLI scheme has not shown significant results in other sectors.

Vostro Accounts – International Trade Settlement In Rupees

Since the Ukraine-Russia war, India has been importing Russian crude oil through a special arrangement called Vostro Accounts.

• Indian importers undertaking imports via this mechanism make payment in INR that gets credited into the Special Vostro account of the correspondent bank of the partner country, against the invoices for the supply of goods or services from the overseas seller.
• Indian exporters using the mechanism are paid the export proceeds in INR from the balances in the designated Special Vostro Accounts of the correspondent bank of the partner country.
• This mechanism aims at promoting the growth of global trade and supporting the increasing interest of the global trading community in INR.

Conclusion – In order to strengthen India’s export market, India should sign more FTAs, integrate domestic industries with Global Value Chains and improve its market penetration into high-income countries.

Read previous AIR Spotlight articles in the link.

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