Services exports scaled a fresh peak of $ 250 billion in FY22, while outbound shipments of merchandise exceeded an ambitious target to hit a record $ 419.5 billion last fiscal, commerce and industry minister Piyush Goyal said on Wednesday.
Services exports were to the tune of $ 206 billion in FY21, down over 3% from a year before, while goods exports had contracted by almost 7% to $ 292 billion due to the Covid outbreak.
The data showed merchandise exports rose 20% from a year before to touch a fresh peak of $ 42.2 billion in March. But imports grew at a faster pace of 24.2% to $ 60.7 billion, leading to a trade deficit of $ 18.51 billion.
Goyal exuded confidence that exports will keep up the good pace in the current fiscal as well, despite the fact that global supply chains remain tangled in the wake of the Russia-Ukraine conflicts, posing fresh external headwinds for Indian exporters. This is because benefits from the recently-concluded free trade agreement with the UAE and another deal with Australia will outweigh potential losses caused by any geo-political tension, he said. The World Trade Organization has slashed its 2022 global trade growth forecast to 3% from an earlier projection of 4.7%, citing the Ukraine crisis.
Responding to a question on crisis-hit Nepal’s curbs on “non-essential imports”, the minister ruled out any significant losses for India. He, however, added that the commerce ministry is studying the precise impact of the restrictions and is also trying to determine what constitutes “non-essential imports”.
Commenting on the buoyant growth in services exports, Goyal said his ministry had to revise the targets for FY22 twice from the initial goal of $ 225 billion to $ 250 billion. “Still, these are provisional data and will most likely be revised up,” he said.
The minister termed the record exports of services a remarkable feat, stressing that it was achieved even though the pandemic had battered the tourism and hospitality sectors. India has moved up the value chain in services in recent years, well beyond just BPO services, he added.
The full-year merchandise exports, thus, exceeded the previous record of $ 330 billion, achieved in FY19, by a wide margin and remained almost 44% higher than the level recorded in the pandemic year of FY21.
While exporters have defied Covid blues in FY22 with a strong performance, strong external headwinds remain, a fact that Goyal acknowledged. Given the global supply chains have witnessed massive disruption in the aftermath of the Russia-Ukraine war and international shipping costs have zoomed, Indian exporters will find it difficult to ship out products and honor supply commitments on time 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.