The changing colour of India’s
export basket is giving a cue to the country’s new trade dynamics. One interesting observation noted in the
Reserve Bank of India (
RBI) first bi-monthly monetary policy statement (MPS) 2019-19, relates to a shift noted in country’s exports basket -- a clear swing away from primary and traditional low value-added exports to higher value-added manufacturing and technology-driven items.
A comparison of key items of exports between 2011-12 and 2018-19 (April-February) reveals that there has been a significant increase in the shares of chemical and related products and engineering goods, and such a shift has imparted a measure of resilience to export demand in a hostile international trading environment, says RBI’s policy statement issued today.
This comes as India’s exports face tepid growth. RBI says against the backdrop of slowing global trade and commerce-inhibiting trade tensions, India’s
merchandise exports (y-o-y) moderated during Q2 and Q3 of 2018-19 relative to Q1.
During Q2, the slowdown in exports was accentuated by a decline in shipments of readymade garments, rice and marine products; in Q3, exports growth was pulled down by gems & jewellery, engineering goods, and meat, dairy & poultry. It is evident that export slowdown is broad-based in nature and impacts most of India’s traditionally strong export segments.
Riding high on the back of the current dispensation’s policy initiatives such as hikes in the interest equalisation rates for micro, small and medium enterprises (MSME) exports from 3 per cent to 5 per cent as well as measures announced in the
Agriculture Export Policy (2018), the RBI hopes it will provide a further fillip to exports..
“Under services, software exports rode on the upside of a significant improvement in export revenues of major IT companies in Q3. Optimistic forecasts of global IT spending in the next two years also portend well for the outlook of software exports. Lower outgo under income account also helped in containing CAD in Q3,” said RBI.