The Union commerce ministry is keen to promote exports by focusing on untapped segments or under-utilised sectors across the country. India’s exports crossed the $300-billion mark after a gap of two years during 2017-18 fiscal. However, the Centre is concerned about the concentration of exports in a few sectors. Hence, it has decided to explore all possible sectors with a state-specific focus. The commerce ministry has also taken a decision to identify every district in every state as a unit to identify export potential for promoting foreign trade.
To achieve this, the ministry has taken up the task of resolving trade issues of exporters across the country. As a part of this endeavour, commerce secretary Rita Teaotia and other officials are meeting industry bodies and exporters in all the states.
Speaking on the commerce ministry’s plans, Teaotia recently said, “We will work with states to promote exports and facilitate the movement of goods in the domestic market. The second focussed area would be trade facilitation through digitisation. The third would be to enhance the quality of products. To achieve all the three focussed areas we’ll work with all the state governments.”
The Federation of Indian Export Organisations (FIEO) has urged the commerce ministry to take necessary measures to resolve the ailing issues.
Dr A Saktivel, southern region chairman at FIEO, said: “The past few months have witnessed a spirited recovery in global trade. This recovery may gather greater momentum in 2018 and can cross 4.2 per cent growth in world trade. Hence, our immediate focus should be on why we’re not able to gallop faster than our competing countries. We have to take quick remedies to resolve issues such as innovation, technology, product diversification, etc.”
The FIEO has urged the government to take up GST refund issues seriously and undertake a clearance drive on all the cases this year. The trade body has also requested the Centre to ensure that banks finance exporters against the pending GST refund claims with interest to be borne by the government.
The commerce ministry is also focusing on resolving issues in top exporting states such as Gujarat, Maharashtra, Karnataka, Tamil Nadu, Telangana, etc, while taking measures to build infrastructure in other states that lag in terms of foreign trade.
Teaotia remarked pertaining to the discussions in Telangana on GST, service exports, etc. “We aim to facilitate exporters to enable them to compete in the global market,” she said.
Teaotia has asked all the states to prepare a strategy for boosting exports from the state and to expand to different areas. “Every state needs to explore their non-core sectors to boost exports. Value-added products from agriculture-related industries should be promoted. The Commerce Ministry is open to work with states on building infrastructure for promoting exports,” Teaotia said.
For the full FY18, exports rose 9.8 per cent to $302.8 billion, while imports were up 19.6 per cent at $459.7 billion, a trade deficit of $156.8 billion against $108.5 billion in FY17.
The disaggregated exports data show that the rebound in India’s exports growth in the current fiscal year has been very uneven. Exports of two commodity-based sectors—petroleum products and iron and steel (and other metals)—have accounted for more than half of the export growth in the current fiscal year. Petroleum, ores, minerals and metals have been the biggest contributors to the exports growth in FY18 rather than labour-intensive goods driving export growth.
Revival in the export of basmati rice has some pleasant surprises in store. The strong demand for basmati rice from Iran may help its exports close the year with a 20% growth at Rs 26,000 crore. A PTI report released last month says that, “that basmati exports may cross Rs 26,000 crore in FY18, clipping at 20 per cent over the past fiscal year and at Rs 28,000 crore in FY19”. Basmati export has witnessed a strong revival in the current fiscal with 22% growth in value in the first nine months after having been in the downward trajectory between FY15 and FY17.
Saudi Arabia and Iran have been traditionally the largest importers of basmati rice from India accounting to 40-45% share. Though the Saudis share has declined to 14% so far in FY18, Iran has increased its share to 28%. Though this may seem heartening for the basmati rice industry, dependence on Iran as its major export destination could prove to be unpredictable in the long run industry experts opine.
Taking a look at the last quarter of FY18, India’s exports rose 9.1 per cent in January, while imports rose 26.1 per cent and this had widened trade deficit to 56-month high of $16.3 bn. In February, export growth eased to 4.5 per cent and trade deficit narrowed to five-month low of $11.98 billion. During the month, merchandise exports rose at moderate pace of 4.5 per cent to $25.83 billion in February 2018 over a year ago. However, merchandise imports growth decelerated sharply to 10.4 per cent at $ 37.81 billion. Oil imports galloped 32.1 per cent to $10.19 billion, while the non-oil imports rose 4.1 per cent to $ 27.62 billion in February 2018 over February 2017.
In March, exports declined by 0.7 per cent. The trade deficit jumped 28.6 per cent to $13.69 billion in March 2018 from $10.65 billion in March 2017. Oil imports galloped 13.9 per cent to $11.11 billion, while the non-oil imports also increased 5.0 per cent to $31.69 billion in March 2018 over March 2017. The share of oil imports in total imports was 26.0 per cent in March 2018, compared with 24.4 per cent in March 2017.
However, the shipments declined in March and higher imports pushed the trade deficit for the full year to a five-year high. Exports declined nearly one percent in March after four months of rise to $29.1 billion from $29.3 billion a year ago. India’s trade deficit widened to $156.8 billion in 2017-18 compared with $108.5 billion in FY17.
(The author is a senior business journalist with over 15 years experience)