Shubhiksha G V, Pune
India’s foreign trade has reached a milestone by surpassing the $800 billion mark in the first half of 2023, a report by the Global Trade Research Initiative (GTRI) says. Despite a global demand slowdown, India’s exports and imports of goods and services demonstrated steadiness during this period.
According to GTRI’s analysis, India’s combined exports and imports of goods and services contributed to this achievement. Exports of goods and services recorded a 1.5% increase, amounting to $385.4 billion from January to June 2023, compared to $379.5 billion during the same period in 2022. Elsewhere, imports registered a 5.9% decline, totalling $415.5 billion in H1 2023, down from $441.7 billion in H1 2022.
The GTRI report highlights that India’s total foreign trade, including exports and imports, reached $800.9 billion during the first six months of 2023. This represents a decline of 2.5% when compared to the corresponding period in 2022.
When examining the performance of goods and services individually, goods exports saw an 8.1% decrease, amounting to $218.7 billion, while goods imports contracted by 8.3%, totalling $325.7 billion. In contrast, services exports demonstrated significant growth of 17.7%, reaching $166.7 billion, while services imports rose by 3.7%, totalling $89.8 billion.
GTRI Co-founder, Ajay Srivastava, attributes the decline in merchandise exports to weak global demand and a loss of competitiveness in labour-intensive sectors. He underscores that the appreciation of the Indian Rupee against the US Dollar did not counteract this decline, as the INR/USD exchange rate increased from 76.16 in April 2022 to 82.18 in April 2023.
Srivastava also predicts that despite challenges such as the Ukraine conflict, high inflation, and financial uncertainty impacting the world trade outlook for 2023, these concerns will be overshadowed by the introduction of new subsidies and precautionary measures by the EU and the USA.
The report emphasises the significance of India’s focus on improving product quality and supply chain competitiveness, particularly as other major economies are adopting similar strategies. Srivastava suggests a targeted approach for addressing unilateral policy decisions, drawing from India’s successful use of retaliatory tariffs in the past.
The GTRI report also highlights the positive export growth in certain sectors, such as telecom, computer and electronics items, machinery, boilers, turbines, pharmaceuticals, and ceramic products. Furthermore, the report suggests that India should prioritise its trade relationships with countries that account for a substantial portion of its exports.
Additionally, the report notes shifts in India’s trade partnerships, with the share of Free Trade Agreement (FTA) partners in merchandise exports decreasing from 30.1% in H1 2022 to 26.8% in H1 2023. The report further highlights changes in India’s crude petroleum imports, particularly noting Russia’s increased share in India’s import of petroleum crude.