Union Budget 2024 | India adding more export destinations, services shipments expanding: Economic Survey

New Delhi: Indian exporters are adding more geographies to promote their outbound shipments and tide over the problems emerging due to global uncertainties caused by geopolitical tensions, the Economic Survey 2023-24 said.

Amidst the prevailing geopolitical dynamics, India is expected to benefit from its strong trade relations across countries, it said.

India has broad and diversified trade relationships with Asia, Europe, and the US.

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It also said that the country's external sector remained strong amidst ongoing geopolitical headwinds accompanied by sticky inflation.

"India is adding more export destinations, signalling regional diversification of exports," the survey said.

Citing a government data, it said the share of the top 10 countries in India’s merchandise exports has registered a declining trend, falling from a high of 61.9 per cent in FY2000 to 50.5 per cent in FY24.

Post-FY2000, Asian, African and Middle East nations, such as the UAE, Singapore, Hong Kong, and China, have emerged as export destinations, replacing traditional export partners like the UK, Germany, and Belgium.

The combined share of the developing regions viz. Asia and Africa in India’s total exports rose from around 42.9 per cent in 1999-2000 to 52 per cent in 2023-24.

In the last fiscal, the UAE, Singapore, China, Russia, and Australia were India’s major export partners.

Cumulatively, merchandise exports in April-June this fiscal climbed 5.84 per cent to $109.96 billion, and imports grew 7.6 per cent to $172.23 billion.

The trade deficit during April-June 2024 widened to $62.26 billion compared to $56.16 billion in the same period last year.

India's share in the global merchandise exports stood at 1.8 per cent in 2022 as against 1.6 per cent in 2020.

Similarly, its share in global services exports too rose to 4.3 per cent in 2022-23 from an average of 3.3 per cent during FY16-FY20.

The commerce ministry is targeting $800 billion worth of goods and services exports this fiscal. It was $778 billion in 2023-24.

"India’s services export in US dollars terms expanded at a robust CAGR of more than 14 per cent over the last 30 years (between 1993 and 2022), significantly higher than India’s merchandise export growth (10.7 per cent) and world services export growth (6.8 per cent)," the survey said.

The country is now the seventh-largest services exporting country globally, with a phenomenal rise from its 24th position in 2001.

India ranks 2nd in the world in telecommunication, computer, and information services exports, 6th in personal, cultural and recreational services exports, 10th in transport services shipments, and 14th in travel.

"India’s deep integration into the value chains of the global software industry has led to a change in the composition of its services exports basket," it added.

Further, India's greater integration in the global value chains is also helping push exports.

"The evidence of India’s enhanced global supply chain participation is reflected in increased investment by foreign firms in electronics, apparel and toys, automobiles and components, capital goods and semiconductor manufacturing in India," it said.

The survey added that after a gap of nearly 10 years, four new FTAs (free trade agreements) have been signed over the period 2021 to 2024.

"Having signed FTAs with most East Asian partners, these new trade engagements focus on gaining access to the Western and African markets, as well as potential partners having trade complementarity," it said.

India’s young demography and growing middle-class population provide an attractive market for its Western FTA partners.

"One of the major criteria for engaging with an FTA partner is to ensure that the trading partner is a natural partner in terms of trade complementarity," it said.