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The disaggregated merchandise trade data shows that excluding oil, exports for the first nine months of the year stood at $257 billion, an increase of almost 25 per cent over the pre-pandemic levels. India’s exports have continued their stellar performance with preliminary trade data released by the Ministry of Commerce and Industry on Monday showing that merchandise exports rose to $37.3 billion in December, recording a growth of 37 per cent over last year, and a similar increase over the pre-pandemic levels. For the first nine months of the year (April-December), exports stood at $299.74 billion, up almost 26 per cent over their 2019 levels. Considering that India’s exports have hovered around $300 billion for several years, that this has been achieved in the first nine months alone, is welcome news. It suggests that by the end of this financial year, exports may well end up touching the $400 billion mark, though the rapid surge in Omicron cases in the US and European economies may yet impact orders in the weeks and months ahead.
The disaggregated merchandise trade data shows that excluding oil, exports for the first nine months of the year stood at $257 billion, an increase of almost 25 per cent over the pre-pandemic levels. A sharp rise is observed across product categories in December — from engineering and electronic goods to textiles. This performance is in line with estimates that indicate that global trade has surpassed its pre-pandemic levels. According to a report by UNCTAD, the value of global trade in goods is about 15 per cent higher than before Covid struck, though trade in services is yet to recover to earlier levels. Over the same period, a sharp surge has also been seen in the country’s imports. Merchandise imports rose to $59.3 billion in December, up almost 50 per cent from the pre-pandemic levels. Over the entire April-December period, imports have risen by almost 22 per cent over the 2019 levels, leading to a widening of the trade deficit. Excluding oil and gold, imports in December were led by electronic goods, machinery and chemicals, which suggests a broad-basing of demand.
To build on this momentum, and to increase India’s share in global trade, the government must reorient its broader trade policy. There are already indications to this effect. Going by recent statements from the government, trade agreements with the EU, Australia, UK and UAE, among others, are being worked upon with greater urgency. On Tuesday, Piyush Goyal, Minister of Commerce and Industry, said that the government was moving towards gaining access to markets for textile products through free trade agreements. The upcoming Union budget is also expected to focus more heavily on trade-related packages. The government should embrace free trade agreements, not shun them. It should seek greater integration with global supply chains. It must pivot away from protectionism, bring down tariffs, and push forward with reforms that boost export competitiveness, and allow for deeper and more comprehensive trade agreements.
This editorial first appeared in the print edition on January 6, 2022 under the title ‘Gains from trade’.
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