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India’s overall exports (including merchandise and services) are estimated to have increased by 13.84 per cent to a record $770.18 billion in 2022-23, while overall imports are expected to have surged 17.38 per cent to $892.18 billion over the previous year, data released by the Ministry of Commerce and Industry on Thursday showed.
A strong trade performance on the services front helped boost the overall export numbers in 2022-23, even as the impact of a global economic slowdown was visibly felt in the case of merchandise trade. Services exports are estimated to have grown by 26.79 per cent, as compared to merchandise exports at just over 6 per cent during the fiscal.
In March, even as trade performance on the services front remained robust with a trade surplus of $13.7 billion, merchandise trade deficit widened to a three-month high of $19.7 billion. The services trade data is yet to be released by the Reserve Bank of India (RBI) for March, so the figures include estimations for the last month of the previous fiscal.
“Based on services exports estimates and actual numbers of goods exports, we have surpassed our target of $750 billion to hit $770.18 billion. Growth is significant as there were recessionary conditions elsewhere… despite global headwinds, we have not only achieved the target, but also surpassed it,” Commerce Secretary Sunil Barthwal said at a briefing.
While the IT and ITES sectors account for a bulk of services exports, the government is making efforts to expand the list to include non-IT services. “We will be focusing on financial services, the fintech sector is coming up. Also, focus will be on transport services, we will see how market share can be improved. There is a whole gamut of non-IT/ ITES services which we would be looking at. We are also hoping for tourism to improve further,” an official said.
In April-December, of the $104.2 billion trade surplus in services, $97 billion was from computer services, as per the latest RBI data. The next biggest contributor was professional and management consulting services at $29.2 billion in April-December. Of the remaining services, transport recorded a deficit of $4.4 billion, travel of $2.1 billion, and financial services was at a surplus of $1.3 billion in April-December.
The merchandise trade deficit, which is the gap between exports and imports, increased by over 39 per cent in 2022-23 to record $266.78 billion, as compared to $191 billion in 2021-22. Merchandise imports increased by 16.51 per cent to $714.24 billion in 2022-23, while merchandise exports rose by 6.03 per cent to $447.46 billion. Overall trade deficit, however, stood at $122 billion in 2022-23, as compared to $83.53 billion in the previous year, gaining support from trade surplus in services.
“The merchandise trade deficit widened in March as import growth outpaced exports. Headwinds from a slowing global economy are beginning to weigh more on exports. The services trade surplus remained robust,” Rahul Bajoria, MD & Head of EM Asia (ex-China) Economics, Barclays said.
During 2022-23, oil imports rose 29.5 per cent to $209.57 billion, reflecting the impact of high crude oil prices in the aftermath of the Russia-Ukraine war. Among countries, while China’s share in India’s import basket declined to 13.79 per cent from 15.43 per cent, it continued to be at first place in the top 10 import sources, with imports at $98.51 billion in 2022-23. India is looking to reduce non-essential imports through quality control orders and by incentivising Production Linked Incentive schemes, an official said. Meanwhile, imports from Russia surged by 369.44 per cent to $46.33 billion in 2022-23.
As per the data, 17 of the 30 major export sectors grew during the last financial year. The percentage increase in volume was higher than the growth in export value in 17 principal commodities in April-February FY23, which suggests price decline. Their export value was $33.9 billion, comprising 8.3 per cent of the total export value which was $408.53 billion.
Experts said though services trade surplus has helped support India’s trade equation, weak global demand will have an impact on exports growth. “Although India’s merchandise exports rose by 6% to touch a record US$ 447.5 billion in FY2023, non-oil exports declined marginally by 0.5% following the slackening external demand due to the global slowdown in H2 FY2023 as well as the moderation in global commodity prices. These concerns are set to exacerbate in FY2024 and are expected to lead to a deeper contraction in India’s merchandise exports during the fiscal. This will weigh on the performance of the manufacturing sector and act as a drag on GDP growth,” Aditi Nayar, Chief Economist, ICRA said.
