A recent report by the Global Trade Research Initiative (GTRI) has indicated that India’s robust performance in the export of electronic goods, particularly smartphones and services, will help mitigate the decline in the overall trade growth rate. The report highlights that India’s exports and imports of goods and services are projected to witness a 2.6 per cent contraction to $1,609 billion in 2023, compared to $1,651.9 billion in 2022.
This decline in India’s merchandise exports aligns with the global trend of a 5 per cent drop, as outlined in UNCTAD’s Global Trade Update. Moreover, China has experienced a 5.2 per cent decrease in merchandise exports during the January-November period of 2023. The World Trade Organization (WTO) has predicted a mere 0.8 per cent growth in global merchandise trade volume for 2023.
Despite the overall dip in trade, certain sectors in India are expected to display growth. The report highlights the growth potential of aviation turbine fuels, motor gasoline, smartphones, basmati rice, motor car-medium size, turbo-jets, and auto components for the year 2023. Notably, smartphone exports are anticipated to surge by approximately 93 per cent to $14 billion in the current calendar year, compared to $7.2 billion in 2022. This exponential increase in smartphone exports will contribute significantly to the overall rise in India’s electronics exports, which showed a growth rate of 26.2 per cent, reaching $26.8 billion.
The report also predicts that imports of electronic goods will grow by over 8 per cent, amounting to $81 billion. However, the imports of finished electronic products like computers, laptops, and other hardware are expected to decline by more than 10 per cent this year.
In contrast, traditional export sectors such as engineering goods, petroleum products, chemicals, gems and jewellery, textiles, cotton yarn/fabrics/made-ups, handloom products, plastics, marine products, leather, carpets, handicrafts, and tea are expected to witness a decline in 2023. The GTRI Co-Founder, Ajay Srivastava, attributes this decline to weak global demand and India gradually losing its competitiveness in labor-intensive sectors. Petroleum product exports may also see a dip of over 9 per cent, reaching $86 billion.
On the imports front, petroleum crude is expected to rise to $139.8 billion in 2023, marking a 14.1 per cent increase over 2022.
The report further suggests that India’s merchandise exports may decline by 5.3 per cent to $429.4 billion in 2023 from $453.3 billion in 2022, while imports could witness a 7 per cent dip to $670 billion compared to $720.2 billion in 2022. However, services exports are predicted to grow by 10.5 per cent to $333.5 billion in 2023, while imports will likely experience a flat growth at $176.4 billion. Consequently, the total value of India’s exports and imports may reduce by 2.6 per cent, from $1.65 trillion in 2022 to $1.61 trillion in 2023.
The report also highlights an anticipated increase of over 18 per cent in gold imports, reaching $43.33 billion this year.
Interestingly, this decline in exports occurred despite a significant depreciation of the Indian Rupee (INR) against the US Dollar (USD). Over one year, the average INR/USD exchange rate depreciated from 77.5 in June 2022 to 82.1 in June 2023, as noted by Srivastava.
