Merchandise exports touched a record $40.38 billion in March, driving up the outbound shipment in FY22 to an all-time high of $417.8 billion, commerce and industry minister Piyush Goyal said on Sunday, while releasing the preliminary trade data.
The full-year exports, thus, exceeded the previous record of $330 billion, achieved in FY19, by a wide margin and remained 43.2% higher than the $292 billion recorded in the pandemic year of FY21.
A spurt in demand for goods in the wake of an industrial resurgence in advanced economies and elevated global commodity price rise have boosted India’s exports in FY22, after a Covid-induced slide in FY21.
Exports in March registered a rise of 14.5% over the same month in 2021 (when outbound shipments had staged a smart rebound) and 87.9% over March 2020 when the pandemic had started spreading its tentacles, forcing a pan-India lockdown in the last six days of that month. With this, goods exports exceeded the crucial $30-billion mark in each of the last 12 months.
Meanwhile, imports, too, are expected to have crossed a record $600 billion. Analysts have already said that merchandise trade deficit may breach the earlier record of $190 billion by a whisker. However, the deficit, as a percentage of overall merchandise commerce, is still way below the earlier peak.
Icra chief economist Aditi Nayar said, “Even though a portion of the upside may have been led by rising commodity prices, the performance has been laudable. We expect the current account deficit to recede under $20 billion in Q4 FY22 (from $23 billion in the previous quarter).”
While exporters have defied Covid blues in FY22 with a strong performance, strong external headwinds remain. Given the tangled global supply chains in the aftermath of the Russia-Ukraine war and consequent surge in international shipping costs, Indian exporters will find it difficult to ship out products on time and honour supply commitments in the coming months.
The US continued to remain the top export destination for India in FY22, while the UAE regained the second spot that it lost out to China in FY21. Bangladesh and Netherlands were two other key export destinations.
Importantly, merchandise exports had remained below par in the past decade, having fluctuated between $250 billion and $330 billion a year since FY11; the highest export of $330 billion was achieved in FY19. So, a sustained surge in exports for a few years will be crucial to India recapturing its lost market share, analysts have said.
The official data showed petroleum products were the biggest driver of exports with a year-on-year surge of 151%. Huge rise was also reported in the exports of cotton yarn, fabrics, made-ups, etc (55%), gems & jewellery (50%), engineering goods (46%), electronics (41%), and organic & inorganic chemicals (32%).
Farm exports, too, hit a record $50 billion in FY22. These are driven by elevated outbound shipments of rice ($9.6 billion), marine products ($8 billion), wheat ($ 2 billion), spices and sugar ($6 billion), among others. Goyal lauded the performance of the farm sector, saying high growth in exports was achieved in time of the pandemic, when India emerged as a major global supplier of food and essential agricultural products.
A Sakthivel, president of the exporters’ body FIEO, “It is encouraging to see exports to developed economies, including the US, Netherlands, Singapore, Hong Kong, UK, Belgium and Germany, saw a quantum jump, which also showcases the increasing strength of manufacturing in exports.” With the conclusion of trade agreements with the UAE and Australia, it’s time to build on this performance, he added.