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India’s trade performance UPSC NOTE


  • India’s merchandise exports, which shrank over 3% in 2023-24 — a year marred by multiple geopolitical and logistical disruptions to global trade — are off to a positive start this year, but only just. 

  • This April recorded outbound shipments worth $34.99 billion, reflecting a meagre uptick of 1.07% or $370 million from a year ago. 

  • As many as 17 of India’s top 30 export items reported year-on-year contractions, compared with 13 in the previous month. 

  • Significantly, these declines are over a weak base — in April 2023, goods exports had tanked 12.7% and 20 of the top 30 items had reported a fall in export values. 

  • The minor growth last month was largely driven by just four items, pharma, chemicals, electronics and, most importantly, petroleum products, which recovered from a 35% contraction in March, aided by the rise in global oil prices

  • On the flip side, the surge in oil and gold prices through April lifted the country’s goods import bill by 10.25% to over $54 billion

  • As a result, last month’s trade deficit was the highest in four months at $19.1 billion, and nearly 22.5% over March’s gap. 

  • If the OPEC+ club, which meets in early June, decides to extend output cuts, oil prices could well hit $100 a barrel. 

  • Moreover, a persistent global savings rush to gold as a safe haven, could keep pushing India’s favourite yellow metal’s prices higher

  • Apart from the deleterious effects of such a scenario on the domestic front (through higher fuel prices, for one), the trade balance and the rupee would be under pressure.

  • Global trade volumes, after tanking 1.2% in 2023, are expected to rise 2.6% this year, as per the World Trade Organization

Way Forward

  • The government is hopeful that India’s key markets in the western world clock lower inflation and improved growth rates, spurring a demand bounce. 

  • However, India needs to sharpen its approach to capitalise on such a bounce and ensure that any gains that may accrue will create wealth across the domestic economy

  • This requires addressing the challenges facing labour-intensive sectors such as garments and footwear, where the country has been losing out to rivals, including Bangladesh and Vietnam, in recent years. 

  • The downward trend for these sectors, as well as gems and jewellery, continued in April

  • Tackling concerns about product quality (in spices or drugs, for example) or allegations about labour or environmental concerns (aimed at booming shrimp exports) with greater vigour, is also critical.

  • Moreover, agricultural exports, curbed in the battle against inflation, must be reinvigorated soon, given the healthy monsoon prospects. 

  • The next government must roll up its sleeves quickly to rev up the export growth engine and ensure trade balances do not turn unwieldy.



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Learnerz IAS | Concept oriented UPSC Classes in Malayalam: India’s trade performance UPSC NOTE
India’s trade performance UPSC NOTE
Learnerz IAS | Concept oriented UPSC Classes in Malayalam
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