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India’s Export Outlook – 2016-17

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August 16, 2017

What is the issue?

  • Merchandise exports have gone up of late.
  • But net exports in services has shown a slight dip which is a cause for concern.

What are the trends in  merchandise?

  • There has been a quiet improvement in India’s merchandise export performance.
  • This began in 2016-17 and has continued into this fiscal, with merchandise trade growth up 8.9% in April-July 2017.
  • Engineering goods and gems and jewellery, which account for 38% of India’s exports, recorded growth rates of nearly 11% each.
  • Agriculture and marine products exports also showed a sharp jump, after a degrowth in 2015-16.
  • This shows that the export turnaround in 2016-17 has been broadbased.
  • The growth has also been geographically dispersed, with exports to Europe, the US and China up by 5.5%, 5% and 13.1%, respectively, in 2016-17.
  • Some labour-intensive sectors such as textiles and leather, besides drugs and pharma, registered negative growth.

What were the factors at work?

  • The growth rate of 5.3% in value terms in 2016-17 is partially attributed to the two consecutive years of negative growth, pointing to a ‘base effect’.
  • The uptick in commodity prices along with increased petroleum and minerals exports also seems to have helped.
  • India’s efforts at bettering export and import procedures to it improve its ‘ease of doing business’ ranking, also seems to have helped.  
  • Focus on logistics, product development and quality has paid off.

How does the trade in services look?

  • Services exports were down 0.3% in dollar terms this June, as against a positive growth of 4% in May 2017.
  • In 2016-17, net invisibles receipts fell 10%, owing to a decline in net receipts of software, insurance and pension services and charges for use of intellectual property rights.
  • The paradigm shift in services due to technology and the anti-globalisation sentiment in the West is a one of the reasons.

 

Source: Businessline

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