India’s GDP has benefited from its expanding export sector, with imports and exports making up more than 43.1% of the country’s GDP in 2023. According to a recent analysis, exports account for 20.5% of India’s GDP, demonstrating the exporters’ competitiveness on the international stage. India has succeeded in securing export orders and surpassing global competitors in spite of obstacles and competition from low-cost nations.
As to the trade statistics released by the Department of Commerce in November 2023, it is anticipated that India’s trade performance in 2023 will exhibit a minor decline of 2.6% in contrast to the preceding year. The main cause of this loss is a 5.3% decrease in merchandise exports. Still, there has been a noteworthy increase in services exports of 10.5%. IT services and software are driving this expansion.
Several industries, including engineering items, chemicals, jewelry and gems, ready-made clothing, and plastics, have had difficulties in the global marketplace. Exports from these industries have decreased as a result of competition from nations like Bangladesh and Vietnam. These industries were not able to continue growing even after the Indian Rupee lost value in relation to the US dollar.
Conversely, industries such as electronics, pharmaceuticals, rice, ceramics, and glassware have experienced an increase in exports. Significantly, it is anticipated that smartphone exports will double by 2023, while imports of electronic goods—including a significant surge in the purchase of electronic components—have also continued to rise.
Software, IT, and business services exports have been helpful in concealing the fall in product exports. For long-term success, it is necessary to diversify and concentrate on non-IT industries including travel, healthcare, education, and audio-visual services.
Free trade agreements (FTAs) have been actively negotiated by India with a number of nations and areas, such as the UK, Oman, and the Indo-Pacific Economic Framework (IPEF). The topics of these agreements include government procurement, labor, gender, intellectual property rights, digital economy, and sustainable development. It is crucial to confirm that these free trade agreements (FTAs) grant genuine market access without limiting national laws.
India will take part in the World Trade Organization’s (WTO) 13th Ministerial Conference in Abu Dhabi in February 2024. Public stockholding for food security, the Special Safeguard Mechanism (SSM) to safeguard farmers, the e-commerce moratorium, fair outcomes in fisheries discussions, and the overhaul of the WTO’s Dispute Settlement System are among India’s top concerns.
The US and the EU, who claim undue gains from Indian government programs and have suggested countervailing levies on Indian imports, are another source of pressure on India. India needs to address the US and EU’s incompatible subsidies and adopt countermeasures as trade restrictions rise in these areas.
India should look for ways to improve trade performance, such as establishing local currency exchanges for exports to lower transaction costs. To stimulate this industry, e-commerce exporting processes must be made simpler.
India’s trade forecast is difficult for 2024, although there are chances for expansion. Improved trade performance could be achieved by concentrating on labor-intensive industries, diversifying services, and maintaining policy leeway through free trade agreements. India’s GDP is expected to overtake Japan’s by 2030.
