Despite disruptions caused by the second wave of the Covid-19 pandemic, Indian businesses achieved exports of $95 billion in the April-June quarter. This, and the eager adoption of the PLI scheme, is raising hopes that the country will be able to export goods worth $500 billion next year and $1 trillion over the following 5 years.
India is on track to achieve its highest ever exports of $400 billion in 2021-22 and is setting its sights even higher – $500 billion in the next financial year and $1 trillion over the following five years. In 2018-18, the country exported goods and services worth $330 billion, the highest annual exports achieved till date.
Despite the disruptions caused by the Covid-19 pandemic, the country’s exports touched $95 billion in the first (April-June) quarter of the current fiscal. This was 85 per cent higher than the figure for the corresponding period last year. But India had been under almost total lockdown that quarter; so, it may not be the appropriate benchmark. Compared to the first quarter of 2019-20, the export figures this year are 18 per cent higher.
“It is also 16 per cent more than the previous highest Q1 exports of FY19 (when the figure was at $82 billion) and is higher than the earlier peak of exports in Q4FY21 ($90 billion),” the commerce department said in a statement.
Merchandise exports account for a third of total exports
A third of the export figure, or $32.46 billion, was contributed by merchandise exports, mainly engineering goods, automobiles, petroleum products and gems and jewellery. This figure was a 47 per cent improvement over the figure for the same quarter last year.
Riding on this good start, the government will work with all stakeholders to achieve exports of $400 billion this fiscal, India’s Commerce and Industry Minister Piyush Goyal told the media.
“Highest-ever exports in a quarter of $95 billion has been achieved in the April to June in 2021 despite the severity of the second wave of Covid-19. Sector-specific interventions, involvement of all the stakeholders and functioning of the government as a whole helped in achieving the growth,” he said.
The government is also hoping to achieve annual services exports of $500 billion over the next five years, Goyal added.
India’s Commerce Secretary B.V.R. Subramanian informed: “The exports in the engineering goods sector rose by $5.2 billion over Q1FY20. Likewise, rice exports growth has remained positive since May 2020 and rose by 37 per cent in Q1FY22, compared to Q1 of 2019-20,” he said, adding that several labour-intensive sectors performed well on the export front during the quarter.
“The government will try to achieve a target of $500 billion in FY23 and $1 trillion merchandise exports annually by the next five years,” the secretary added.
The government’s optimism probably stems from the eager acceptance by industry of its production-linked incentive (PLI) scheme for several sectors.
In order to attract companies looking at alternatives to China, the Modi government has announced PLI schemes for 13 sectors like smartphones, telecom gear, specialty steel medical devices and solar equipment and modules, among others.
Already, companies such as Apple, Nokia and others have signed up for the scheme. Once their factories are up and running, these 13 sectors are expected to add hundreds of billions of dollars to India’s GDP and exports.
This could pave the way for the government to achieve the export figures announced by the Commerce Secretary.
Of particular significance is the performance of the automobile sector, which is the largest employer in the manufacturing sector and accounts for 7 per cent of the country’s GDP of close to $3 trillion.
According to data from the Society of Indian Automobile Manufacturers (SIAM), vehicle exports from the country rose sharply to 1,419,430 units during the April-June 2021 period, a sharp increase from 436,500 vehicles in the previous corresponding quarter. The figures are, however, not strictly comparable for the same reason cited above.
"If we just compare export numbers of Q1 of 2021-22, two-wheelers have done better than previous three years. However, the total number of passenger vehicles, three-wheelers and commercial vehicles exports were higher in Q1 of 2018-19," Rajesh Menon, Director General of SIAM told PTI.
The country’s automakers exported 127,115 passenger vehicles during the first quarter of the current fiscal, compared to 43,619 units last year. Of this, passenger cars accounted for 79,376 units, utility vehicle 47,151 units and vans 588 units.
The country’s largest car maker, Maruti Suzuki India accounted for more than a third of the exports (45,056 units). South Korean twins Hyundai Motors and Kia Motors shipped 29,881 units and 12,448 units, respectively, while Volkswagen India exported 11,566 units during the quarter.
The two-wheeler segment also recorded similar growth over the figures for the Covid-hit previous corresponding quarter, with exports jumping to 1,137,102 units in the April-June period compared to 337,983 units last year.
Likewise, commercial vehicle exports during the first quarter stood rose sharply to 16,006 units against 3,870 units in the April-June period of 2020-21. But as stated above, the figures aren’t strictly comparable as India was in the midst of the world’s most stringent lockdown in the first quarter of the last financial year.