India's merchandise exports touched a record $420 billion in FY22. It took a decade for India to incrementally add another $100 billion (the $300 billion mark was touched in FY12) as against reaching $200 billion from $100 billion in only 5 years (FY06 to FY11).
Among the factors that contributed to this growth included "the emergence of new trade corridor through FTAs/ECTA/CEPA" and the government's Production-Linked Incentive, or PLI scheme, SBI said in a report on Friday.
"India's exports of goods and services (% of GDP) which was only 3.7 per cent in 1970 and 6.1 per cent in 1980, reached a peak in 2013 (25.4 per cent) but decelerated thereafter till 2020 (18.7 per cent) mirroring the global trend. The share of service exports in total exports has increased gradually, and significantly from 27 per cent in FY2001 to 41 per cent in FY21, though moderating to 37 per cent in FY22," the report added.
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It further stated that the concentration of the top 10 countries in India's export basket has reduced over the years and the share of others has increased, thereby implying the diversification of export destinations.
"Top 15 exports accounted for more than 72 per cent in our total export kitty during Apr-Feb' FY22," the report noted.
It stated that contrary to popular perception, the report's estimates show that "55 per cent of the increase in exports in FY22 is attributed to quantity effect and the rest 45 per cent is the price effect, indicating that the growth in exports in FY22 could be sustained if we continue to follow right policies."
The report's results demonstrate that only 31 per cent of the increase in exports of petroleum crude and products in FY22 can be attributed to higher quantity and the rest 69 per cent is because of higher prices.
"In the case of imports, 26 per cent is quantity effect and the rest 74 per cent is the price effect, which is obvious given the elevated level of global commodity/food prices," it noted.
Mentioning the country's agricultural exports, the report stated that they rose remarkably despite COVID-19 and crossed the $50 billion mark in FY22. However, the large gap in Minimum Support Price (MSP) and global prices is likely to incentivise the export of wheat from India, which the report said needs to be "judiciously balanced with the domestic supply of wheat." Exports of Goods and Services (% of GDP)
India's exports of goods and services (% of GDP) which was 3.7 per cent in 1970 and 6.1 per cent in 1980, reached a peak in 2013 (25.4 per cent) but decelerated continuously thereafter till 2020 (18.7 per cent) mirroring the global trend, according to the report.
In FY22, the share of exports in GDP has already crossed 20.8 per cent, and at an 18 per cent growth rate, the share could reach the peak again in FY26, it estimated.
"India's exports of services are expected to be $245 billion for FY22, and with goods export at $420 billion thereby total trade at $665 billion," the report stated.
The share of service exports in total exports has increased gradually from 27 per cent in FY2001 to 41 per cent in FY2021, but it has moderated to 37 per cent in FY22 reflecting the pandemic induced disruptions, it noted.
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India is following a policy of import rationalisation with China, the report noted, adding that India imported $5 billion less from China in FY20 vis-a-vis FY19 and a further $48 million lower in FY21.
However, in FY22 the country's imports from China increased significantly, reflecting the pandemic induced uncertainties, it stated.
"The share of imports from China has however declined in FY22. Simultaneously, India has been also able to push exports to China and in FY22 it occupies a share of 5.2 per cent of our exports/3rd in terms of ranking of countries," the report said.
India's service exports of Telecommunications, Computer, and Information Services far outpace China. However, China is rapidly catching up and India needs to buckle up in these areas, the SBI report cautioned.