By R Anil Kumar
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India registered record exports in the just concluded financial year 2023-24 at USD 778 billion – Report
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In 2022-23, the country exported goods and services combined at USD 776.3 billion
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In break up-services exports rose from USD 325.3 billion to USD 341.1 billion in 2023-24
New Delhi. India has released its latest trade data, forecasting that export figures will sustain the peak achieved in the previous year, reaching an estimated US$776.68 billion in the fiscal year (FY) 2023–24, slightly surpassing the US$776.40 billion recorded in the preceding fiscal year.
According to the Ministry of Commerce and Industry, Financial Year 2023-24 concluded with the highest monthly merchandise exports of the fiscal year, totalling US$41.68 billion in March 2024.
Looking ahead, India is actively working on expanding its export portfolio beyond traditional sectors like iron ore and agricultural commodities. The focus is on diversifying into electronics, pharmaceuticals, engineering products, and food items. The Ministry of Commerce’s initiative aims to strengthen export offerings by introducing goods such as alcohol beverages, prepared meals, confectioneries, and value-added products like jackfruit and bananas.
To tailor products to the preferences and legal requirements of each target market, the commerce ministry’s strategy will entail thorough market research and analysis.
In break up, services exports rose from USD 325.3 billion to USD 341.1 billion in 2023-24. Merchandise exports though marginally declined from USD 451.1 billion to USD 437.1 billion.
Among various steps the government took was to launch a Production Linked Incentive (PLI) scheme in varied sectors, including electronic goods, to make Indian manufacturers globally competitive, attract investments, enhance exports, integrate India into the global supply chain and reduce dependency on imports. These seemed to have reaped dividends.
China, Russia, Iraq, UAE, and Singapore are among the countries where India’s exports in the just-concluded financial year have risen substantially, though with a low base. The other countries in the Top 10 list are the UK, Australia, Saudi Arabia, the Netherlands, and South Africa.
Coming to overall imports, they declined from USD 898.0 billion in 2022-23 to USD 853.8 billion. Both merchandise and services imports declined during the financial year.
Overall trade deficit significantly improved from USD 121.6 billion in 2022-23 to USD 75.6 billion in 2023-24.
In the first month of 2024-25 – April, India exports, including merchandise and services, rose from USD 60.40 billion to USD 64.56 billion. Imports however rose from USD 63.02 billion to USD 71.07 billion.
The trade deficit during April rose from USD 2.62 billion to USD 6.51 billion on a yearly basis.
During April, exports of electronic goods, organic and inorganic chemicals, petroleum products, and drugs and pharmaceuticals were higher on a yearly basis. On the contrary, exports of engineering goods, iron ore, gems and jewellery, marine products, and oil meals declined.
On the import side, petroleum crude and products, gold, electronic goods, pulses, and vegetable oil, rose while pearls precious metals and precious stones, iron and steel, among others, declined.
China surpasses the US to become India’s largest trading partner
According to data from the economic think tank GTRI, China has emerged as India’s largest trading partner, surpassing the US, with two-way commerce totalling US$118.4 billion in FY 2023-24. In the same period, bilateral trade between India and the US amounted to US$118.3 billion. Previously, the US was India’s top trading partner in 2021-22 and 2022-23.
GTRI’s analysis shows that India’s exports to China experienced a notable increase of 8.7 percent in FY24, reaching US$16.67 billion. Key sectors driving this growth included iron ore, cotton yarn, fabrics, madeups, handloom products, spices, fruits and vegetables, as well as plastic and linoleum.
Meanwhile, imports from China saw a moderate rise of 3.24 percent, totalling US$101.7 billion. Key import items included high-tech gear like telecom and smartphone parts, laptop and PCs, as well as industrial inputs such as plastic, iron and steel, and chemicals.
Conversely, Indian exports to the US witnessed a slight decrease of 1.32 percent, amounting to US$77.5 billion in FY24, compared to US$78.54 billion in 2022–23. Additionally, imports from the US declined by approximately 20 percent, settling at US$40.8 billion, as indicated by the data.
Based on data from the commerce ministry, China held the position of India’s primary trading partner from 2013-14 to 2017-18, and then again in 2020-21. Prior to China’s dominance, the UAE occupied the top spot as India’s largest trading partner.
However, in FY24, the UAE ranked third with a trade volume of US$83.6 billion. Following closely were Russia with US$65.7 billion, Saudi Arabia with US$43.4 billion, and Singapore with US$35.6 billion in trade with India.
In FY24, imports from India’s key free trade agreement (FTA) partners (South Korea, Japan, Australia, UAE, Mauritius, ASEAN, and SAFTA) exhibited a robust growth rate, outpacing the overall influx of goods into the country. Specifically, these imports saw an impressive increase of nearly 38 percent, reaching a total of US$187.92 billion. This growth rate surpassed the 31.4 percent jump in India’s total imports, which amounted to US$675.45 billion during the same period. India’s total outbound shipments to its FTA partners grew at a more subdued pace.
Climbing up the ladder of merchandise exports
India’s position among the world’s merchandise exporters has advanced from 19th to 17th place, with a marginal increase in its share from 1.70 percent in 2014 to 1.82 percent in 2023. India states that, despite global economic uncertainties, its exports have expanded to 115 countries out of a total of 238 destinations during the 2023-24 period.
These 115 export destinations, which represent 46.5 percent of India’s export portfolio, include key markets such as the US, UAE, Netherlands, China, UK, Saudi Arabia, Singapore, Bangladesh, Germany, and Italy.
While the country’s overall merchandise exports experienced a 3 percent decline to US$437.1 billion in the previous fiscal year, services exports increased to US$341.1 billion in 2023-24, up from U$325.3 billion in 2022-23.
India seeking new exports markets
India’s Ministry of Commerce intends to promote iron ore exports to Kenya, Saudi Arabia, and France. Additionally, it has identified new markets for engineering items in Sao Tome, Macao, Georgia, and Croatia. For agricultural and processed food products, it has secured markets in Nigeria, Switzerland, and Lithuania, and for pharmaceuticals, it is exploring new markets such as Montenegro and South Sudan.
To support these initiatives, policy interventions are underway to strengthen ties with the processed food industry through the Agricultural and Processed Food Products Export Development Authority (APEDA). Additionally, the government is contemplating lifting bans on certain exports, such as wheat and rice, to further balance trade dynamics.
In September 2022, India had imposed a ban on the trading of broken rice, followed by a prohibition on wheat exports in May 2022. Effective July 20, 2023, exports of non-basmati rice were also prohibited. Regarding onions, a notification from the Directorate General of Foreign Trade (DGFT) in December 2023 introduced a minimum export price (MEP) of US$550 per tonne. Furthermore, on May 10, 2024, a 40 percent export tariff on staple vegetables was implemented, with onion shipments remaining banned for over six months.
Considering lifting the export ban on additional commodities could open up trading opportunities for India, potentially enhancing farmers’ income through crop diversification and promoting processed food products in global markets.
China market access for Indian companies
Acknowledging India’s concerns regarding its substantial trade deficit with China, the newly appointed Chinese ambassador, Xu Feihong, expressed Beijing’s willingness to address this issue by enabling more Indian enterprises to access the Chinese market.
In 2022, India’s trade deficit surpassed the US$100 billion mark, reaching US$101 billion for the first time. India has approached China to open up sectors such as IT, pharmaceuticals, and grains, which hold significant export potential for India.
The bilateral trade between India and China continues to be robust, with total trade reaching a record US$136.2 billion in 2023. India’s trade deficit decreased marginally to US$99.2 billion in 2023, from US$100 billion in 2022, according to data from China’s customs authorities.
China is reportedly prepared to assist Indian companies in meeting the demands of the Chinese market and exploring opportunities for commercial and trade collaboration. Xu noted that Chinese diplomatic missions in India issued nearly 190,000 visas in 2023, with over 80 percent being business visas, underscoring the importance of business travel for bilateral trade. Xu also said that China would offer more support for India’s participation in events like the China International Import Expo, the China-South Asia Expo, and the Canton Fair.
