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.
