Indian economy and exports went to a standstill when the Covid-19 pandemic induced lockdown emerged. According to the government guidelines, Industrial activities, foreign trade, and many others were compelled to shut down following the alarming threat of the coronavirus strictly. While millions were grappling due to the astonishing turnaround of events, India’s exports suffered due to the nationwide lockdown last year, affecting manufacturing and logistics. The stressing signs were vigilant to the policymakers, but no sizeable think-tank boosted India’s GDP.
India’s industrial manufacturers and producers were left remarkably disappointed by the lack of proactiveness amidst the shrinking economy. Many of them felt that a slightly conceived policy could have meant structural recovery for the demolishing businesses across India. However, in the midst of the whacking trouble might arrive a boost from the exports. The strong rebounds of outbound shipments have surpassed the levels achieved in 2020, but it is more appealing than in April 2019.
How has the Exports Segment performed Over the Years?
The initial Covid-19 pandemic wave had a massive slack on India’s production capacity, and as a result, a plaguing scenario undermined the exports segment. The external trade’s share in the GDP percentage is significantly lesser than other factors, but its overall financial valuation could uplift the Indian economy.
Due to getting unleashed last year, the Foreign Trade Policy(2021-26) got delayed amidst the shocking onset of the Covid-19 pandemic. Evaluation of data in numerical terms has provided insight into India’s export performance over the last two decades. While it substantially upheaved the US $44 billion in 2001 to the US $220 billion ten years later, its overall increase has been significantly substandard. Why do we say so? If the statistics have improved, so should have India exports’ share in the GDP percentage.
However, the outcome has drastically staggered the analysts. The global exports have remained constant over nearly a decade, reaching only 1.7 per cent in 2019 compared to 1.5 in 2010. Our neighbouring countries are conducting perennial activities for strengthening their export-GDP ratio, while India’s has pushed down its valuations. Vietnam, for instance, has accentuated an increase in its ratio from 72 per cent to stand out virtuously at 107 per cent. India can’t match such striking levels unless our way of conducting activities on the global exports revamp.
India Exports: A Bullish Trend to Follow?
The eventful grimace might change its toll towards a reaping-reward period. India’s exports have recuperated to favourable terms for four consecutive quarters, but it’s still far-fetched off various export stimulating economies. Multiple factors have contributed to the dramatic overhaul of external trade, with the focal point concealed on exporting food grains, Covid-19 medicine supplies, drugs etc. Currently, exports valuation in the April-June quarter were estimated at $93.5 million, a 17 per cent upswing from the levels achieved in 2019. When the lockdown commenced, activities were in a dire state, and its imminent repercussions were followed in India’s Export-GDP ratio.
The global demand has marginally declined during the second wave of the pandemic crisis as factories progressed at half-strength, allowing exports to propel in the harsh conditions. The President of India’s Export Organization, A Sakthivel, has claimed that the global exposure has restrained its buoyancy and is moving ahead in the right trajectory. June observed a record high surge in India’s exporting segments as jewellery and engineering goods’ outsourcing shipments validated its ballooning period.
The emerging economies worldwide are trying to be opportunistic following the alleviation of troublesome times of the pandemic. The caveat for growth in the extravagant global markets could get instilled only if the government understands the scale of its potential capacity of fulfilling its domestic reforms for higher exports. The financial year has started on a profoundly better note than the last two years. With the current trends of infections declining and economic recovery in full flow, exports could benefit the largest.
Categories Benefitting the Most in India’s Export-
India’s heavyweight in the exports segment has been initiated by engineering goods, making nearly a fifth of all outbound shipments from the domestic lines. Engineerings goods perceived a heightened growth over the last year, rising to $49.7 billion in January-June 2021. India’s top seven exports’ merchandise has increased since the commencement of the year, and its major spike being observed in electronic goods, constituting 30% advancement. The graph was followed by rice shipments leading to the surge of exports. It contributed 25.7 per cent of escalation, which was the largest across the agricultural commodities.
The recovery in the global markets has uplifted the export of engineering goods, which reached its all-time high in Q1 of FY22. Its potential exceeds its high share of business occurring in the US and might cross the $100-billion mark proceeding at the same pace.
Can Export-led Growth Compensate for The Adversities And Weaknesses of the Indian economy?
While the economists have foresighted a comprehensive revival from exports this year, the adversities of the Indian economy can’t be over until our policymakers focus on prompting measures for national industries. The Indian exports fail to procure their dues effectively, which has endeavoured more risk into the scheme. India’s top five export merchandise delivers more than 37% of returns from the total market concentration.
It might be an elevated figure but still is markedly lesser than the indices prevailing in the foreign economies. Lockdowns had surfaced some key problems for the industrial set-up in terms of stopped production, finance issues. And with the third wave edging across the corner, Indian policymakers should give their utmost attention to assimilating the urge of domestic demand.
In 2012, India’s goods Export-GDP ratio was 16%, and it has shrunk since then to 10-12 per cent. It is a concerning factor as India can’t expect an economic rebound from an influential exporting period, as the share in GDP’s percentage has diminished over the years. A certain slack of the pandemic’s bearings could get covered if continuous monitoring of labour-intensive exports is prioritised. The weaknesses and the financial crisis would retain its stance, and a surreal growth path will get eventuated if the domestic demand upheaves.