India’s trade landscape has witnessed remarkable growth despite global challenges, as indicated by the latest figures released by the Ministry of Commerce & Industry. The data reveals that India’s overall exports, encompassing both merchandise and services, have surged to a historic high of US$ 776.68 billion in the fiscal year ended 2023-24.
This marginal increase over the previous year’s record of $776.4 billion was driven by a strong performance in services exports, which offset a slight decline in merchandise exports.
Merchandise and Services Exports
Merchandise exports, the backbone of India’s trade sector, experienced a contraction of 3.11% to reach $437.06 billion in FY24, compared to $451.07 billion in FY23. However, despite challenges, this decline was offset by a notable 4.4% growth in services exports, which reached a record $339.62 billion.
Improvement in Trade Deficit
A standout performance was the substantial improvement in the overall trade deficit, which reduced by 35.77% from $121.62 billion in FY23 to $78.12 billion in FY24. Merchandise trade deficit also saw a notable reduction, declining by 9.33% to $240.17 billion in FY24 from $264.90 billion in FY23.
Sectoral Drivers of Growth
Several sectors drove India’s merchandise export growth in FY24. Electronic goods exports surged by 23.64%, reaching $29.12 billion while drugs and pharmaceuticals exports saw a notable increase of 9.67% to $27.85 billion. Engineering goods exports also contributed to the trend, rising by 2.13% to $109.32 billion. Additionally, exports of agricultural commodities, including tobacco, fruits and vegetables, and spices, exhibited robust growth.
Government of India’s Initiatives
Commerce Secretary, Sunil Barthwal, attributed the positive export growth to the government’s strategic initiatives aimed at exploring new markets and expanding the export basket.
The Federation of Indian Export Organisations (FIEO) president, Ashwani Kumar, praised the dedication of the export sector. Despite geopolitical tensions and economic uncertainties, India’s exports were resilient and adaptable, finding opportunities in emerging markets while navigating global challenges such as the Russia-Ukraine war and rising interest rates in developed economies.
Overall exports surpassing FY23 figures of US$ 776.40 billion to US$ 776.68 billion despite persistent global challenges, shows the resolve of the resilient and vibrant exports sector of the economy: Mr Ashwani Kumar, President, FIEO
Read Press Release at https://t.co/wLc6kmWiE3 pic.twitter.com/yak5sqwOfs
— FIEO (@FieoHq) April 15, 2024
Current Account Impact and Outlook
Aditi Nayar, chief economist at ICRA Ltd., believes that the narrowing merchandise trade deficit is a positive sign for India’s current account deficit. The decline in imports, especially gold along with non-oil and non-gold items, is expected to improve the current account situation in the last quarter of FY2024.
According to Barthwal, Indian exporters are better prepared in 2024-25, but there are new challenges to cope with. Commenting on the recent escalation of the Israel-Iran conflict, he said, “We are monitoring the situation and will take appropriate action.”
