Following the news of India’s merchandize exports crossing the ambitious target of $400bn;

Gargi Rao, Economic Research Analyst at GlobalData, a leading data and analytics company, offers her view:

“Despite COVID-19 and Russia-Ukraine war, India achieved the target of $400bn merchandize exports in FY21, which is a key milestone towards becoming an ‘Atmanirbhar Bharath’. GlobalData expects the trend to continue and forecasts the overall exports to grow by 4.5% in 2022 and at an average annual rate of 4.3% during 2022-2024.

“Higher exports growth is a major driver of economic activities as it spurs demand and helps in higher jobs creation. Against this backdrop, GlobalData forecasts the Indian economy to grow by 7.6% in 2022, fastest among all other major economies.

“Through ‘Make in India’ initiative, Indian goods have become more competitive, and manufacturers have improved the quality of goods, which resulted in the higher demand in the international market. Also, active participation from states, public-private stakeholders through engaging export promotion councils and faster resolution of any supply-side bottlenecks contributed to the growth.

“In terms of monthly merchandise exports, according to the Ministry of Commerce, February witnessed a 25.1% (YoY) growth to reach $34.5bn. Furthermore, with new export orders and output, India’s manufacturing PMI jumped to 54.9 in February 2022 compared to 54 in January. Strong pick-up in manufacturing activity is expected owing to increase in export orders.

“Petroleum products, engineering goods and electronic goods were the top three exported commodities in February 2022. The volume of agricultural commodities exported in FY22 was the highest ever and driven by commodities like rice, wheat, and spices, according to the Ministry of Commerce.

“Continued support from the government to small and medium enterprises helped India secure huge gains in merchandize exports. Also, the introduction of product-linked schemes and promotion of local products in international markets contributed to the surge in exports.

“Given India’s neutral stance on Russia-Ukraine conflict, Russia is offering oil and other commodities at discounted prices to India. Amid the skyrocketing global oil prices, this will provide relief on the fiscal front as India imports around 80% of crude from other countries. With growing exports and importing at low prices, GlobalData forecasts fiscal deficit as percentage of GDP to decline marginally to 5.3% in 2022 compared to 5.7% in 2021. This will likely provide some respite to the rising current account deficit of the country.

“In the long-run, robust exports growth will bring in a chain of positive economic reactions, including new job opportunities, increase forex reserves, boost domestic manufacturing, improve current account balance and increase government revenues.”