Latest data showed that goods exports went up just under 6% to $447 billion, which is a new high but lower than what was expected at the start of the last financial year. Imports rose 16.5% to $714 billion, resulting in a record trade deficit.India, the land of diversity and culture, has set a new record in its trade history by surpassing its previous record of $314 billion in exports. The country's exports have reached an all-time high of $770 billion in FY23. This achievement is a significant milestone for the Indian economy, as it has been achieved amidst the COVID-19 pandemic.
India's export performance is a testament to the resilience of the Indian economy and the efforts made by the Indian government to boost its foreign trade. The record-breaking exports are expected to have far-reaching implications for the Indian economy. This article discusses the implications of India's record-breaking exports of $770 billion in FY23.
Why are India's exports important?
India's exports are critical for the country's economic growth and development. Exports account for a significant portion of the country's GDP, which was around 20% in 2020-21. India's exports are also essential for job creation and poverty reduction. The country's export sector employs around 45 million people, and it is expected to create more jobs in the future.
India's export sector is also crucial for the country's balance of payments. The export earnings help in bridging the trade deficit, which occurs when a country imports more than it exports. The export earnings also contribute to the country's foreign exchange reserves, which are essential for maintaining the stability of the Indian rupee and financing the country's imports.
What led to the record-breaking exports?
Several factors have contributed to India's record-breaking exports of $770 billion in FY23. Some of these factors are:
1. Diversification of exports
India's export basket has diversified significantly in recent years, with a focus on high-value-added products. The country has reduced its dependence on traditional export items such as textiles and apparel and has increased its exports of engineering goods, pharmaceuticals, and chemicals. The diversification of exports has helped in increasing the value of exports.
2. Increase in demand from developed countries
The COVID-19 pandemic has led to a shift in global trade patterns, with developed countries focusing on reducing their dependence on China. This shift has led to an increase in demand for Indian goods in developed countries such as the US and the EU. The increase in demand has helped in boosting India's exports.
3. Government incentives and policies
The Indian government has launched several initiatives and policies to boost the country's export sector. These initiatives include the Production Linked Incentive (PLI) scheme, the Foreign Trade Policy, and the Trade Infrastructure for Export Scheme (TIES). The PLI scheme provides incentives to domestic manufacturers to increase their production and exports. The Foreign Trade Policy provides various incentives to exporters, such as duty-free import of inputs, export promotion capital goods scheme, and duty drawback scheme. The TIES scheme provides financial assistance to develop export-related infrastructure such as SEZs, ports, and airports.
4. Ease of doing business
The Indian government has taken several measures to improve the ease of doing business in the country. These measures include simplification of procedures, digitization of processes, and reduction in compliance burden. The improvement in the ease of doing business has made it easier for exporters to do business and has helped in boosting exports.
