“India set an ambitious goods export target of $400 billion and achieved it for the first time. I congratulate our farmers, weavers, MSMEs, manufacturers and exporters for this success," Prime Minister Narendra Modi tweeted.
How India's exports surpassed the $400 billion mark for the first time
This is the first time ever that exports have crossed the $400 billion mark. The previous best was $331.02 billion which was achieved in 2018-19.
Pointing out the target was achieved nine days ahead of schedule, Modi tweeted that this translated to $33 billion worth of exports every month, $1 billion of exports every day, and $ 46 million worth of exports every hour of the year.
India set an ambitious target of $400 Billion of goods exports & achieves this target for the first time ever. I congratulate our farmers, weavers, MSMEs, manufacturers, exporters for this success.— Narendra Modi (@narendramodi) March 23, 2022
This is a key milestone in our Aatmanirbhar Bharat journey. #LocalGoesGlobal pic.twitter.com/zZIQgJuNeQ
India has added approximately $25.19 billion in exports so far in March and is expected to reach approximately $410 billion by the end of this fiscal year.
Despite the devastating second wave of Covid-19 in April and May of 2021, exports remained positive. Since March of last year, it has remained above the $30 billion mark.
In terms of monthly exports, December saw a 38.91% year-on-year (y-o-y) increase to $37.81 billion, the highest figure ever. The trend continued in 2022, with exports totalling $34.6 billion in January and $34.57 billion in February, representing a 23.4 percent and 25.1 percent increase, respectively.
According to data released by the ministry of commerce & Industry on March 14, India's Merchandise exports for the period April-February 2021-2022 Stood at $374.81 billion as against $ 256.55 billion during the April-February 2020-2021, registering a growth of 46.09%.
Engineering and petroleum products saw an increase in their share of exports. The three categories, along with gems and jewellery, accounted for half of India's merchandise exports.
While categories like electronic goods and agricultural commodities saw a rise in exports, their share in the outbound shipment has not risen.
Non-oil and non-gold exports rose to $284 billion in FY22 up to February 2022, a rise of 20% from FY21. Product-wise data for March is not yet available. Their share has risen from 75.1% of all merchandise exports in FY20 to 75.8% in FY22 up to February 2022.
Engineering goods remained India's largest export item, contributing 26.9% of all merchandise exports in the first 11 months of FY22.
Exports of engineering goods rose 32% upto February 2022 on an annual basis. Compared to the pre-pandemic year of FY20, exports in this category are up 28%.
Exports of petroleum products saw the sharpest rise at 114% from FY21, led by a rise in crude oil prices. Compared to FY20, they registered a rise of 30%.
Electronic goods, organic and inorganic chemicals also saw a rise in exports, even though their share in total exports remained the same as in FY20.
Gems and jewellery exports and readymade garment shipments lost share compared to the pre-pandemic year, while rice — India's single largest agricultural export — made up for 2.3% of all merchandise exports.
What led to the Increase in Exports?
One of the primary reasons for the increase in exports is increased pent-up demand, which had decreased as the Covid pandemic forced nations to remain under strict lockdown, affecting global trade.
Furthermore, an increase in domestic manufacturing due to production-liked incentive (PLI) schemes and the implementation of some interim trade pacts has resulted in an increase in exports.
In its mission to promote locally made products in the global market, the Centre implemented a series of steps to promote exports of both goods and services and that includes the -
Introduction of Refund of Duties Taxes on Exported Products (RoDTEP): This scheme was implemented by the GOI to facilitate exporters more efficiently. This replaced the pre-existing MEIS scheme.
The main objective of this scheme is to reimburse all exporters on taxes as well as duties that were previously non-reimbursable. This gives exporters new benefits for exporting goods and services outside the country of India and promotes international trade.
Rebate of State and Central Levies and Taxes (RoSCTL) Schemes: RoSL plays a vital role for the exporters by providing zero-rated taxation on apparel and made-up products. This scheme has enabled the exporters to increase traffic, enhance competitiveness among the global market, and compete against countries such as Sri Lanka, Bangladesh, Cambodia and Vietnam, who enjoy zero taxation.
This also helped the traders who export to the European Union (EU), India’s largest export market for the apparel sector, facing a tariff variation of 9.6 per cent.
GoI has implemented the RoSL scheme on 7th March 2019 to March 31, 2020, through IT-driven Scrip System to prevent delay and ensure swift distribution of products.
Other schemes include the launch of Common Digital Platform for Certificate of Origin to facilitate trade and increase FTA utilisation by exporters, promoting districts as export hubs by identifying products with export potential in each district and addressing bottlenecks, and promoting ease of doing business.
The Importance of Exports
The amount of merchandise exported by a country is critical to revenue generation and economic growth. Several economists have pointed out that increased exports help nations grow rapidly in terms of GDP and domestic output.
Exports are extremely important for the overall growth of a country’s economy and also for global trade. In this era of globalisation, most leading economies in the world are also major exporters.
For instance, China is the world's largest exporter of goods, followed by the United States, Germany, and Japan. India is also climbing the ranks as it expands its global export footprint. India is currently one of the world's top agricultural exporters.
Exports provide millions of small business owners and corporate firms with access to a larger global market to sell their products.
It is worth noting that exports not only help governments generate additional revenue, but they also help exporters — both small and large businesses — expand operations due to higher profits.
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