Exports growth: No time for complacency

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Bikky Khosla | 16 Apr, 2018
The commerce ministry last week came out with exports figures for the month of March. The data shows that there was a 0.66 percent dip in overseas shipments to $29.11 billion in the month. But overall for the 2017-18 financial year, there was a 9.78 percent growth in overseas shipments. Total exports aggregated at $302.84 billion in the year, against $275.85 billion in the previous fiscal. Overall, these figures do not look that bad, but a closer look signals to some worrying trends which need urgent attention from the government.

First, the rising trade deficit is not a good sign. Our exports have failed to keep pace with our imports, which in 2017-18 grew by 19.59 percent to $459.67 billion from $384.36 billion reported for 2016-17, leading to trade deficit of $156.83 billion. In March alone, imports grew by 7.15 percent to $42.8 billion, leaving a trade deficit of $13.69 billion. Swelling prices of crude oil, imports of which stood at $11.11 billion in March, 13.92 percent higher than the same month previous year, contributed in a big way to this deficit.

Second, lacklustre performance by several labour-intensive and highly SME populated sectors is another major concern. Gems and jewellery exports fell 16.6 percent y-o-y to $3.4 billion in March, the second straight month of contraction. Exports of readymade garment of all textiles fell 17.8 percent to US$ 1.49 billion. Engineering exports could manage to grow only by a meagre 2.62 percent. Exports of jute and agri products were also in the negative territory. This trend needs to be reversed urgently, with careful redrawing of our external trade strategy.

A recent report shows that India’s exports as a proportion to GDP at 11.65 percent in 2017-18 is the lowest since 2003-04. Some experts attribute this fall to implementation of GST, an argument which sounds quite logical. Recently, the problem of liquidity has reared its head again with banks and lending agencies tightening their norms in the backdrop of the PNB fraud. Additionally, the rise of protectionism in the US is another concern. So, the government must step in to cushion the sector by addressing all domestic issues it is facing with utmost urgency.

I invite your opinions.