Increasing demand at the top-end for luxury and investment goods has upended the trade dynamics in the gems and jewellery, textiles and clothing sectors, according to a five-year analysis of India’s merchandise trade. These sectors are in focus because of their high employment generation potential.
Between FY19 and FY24 exports of textiles and clothing fell 7.10% to $34.84 billion, while imports increased by 20.33% to $8.90 billion suggesting challenges in the global market competition and a steady local market growth for imported goods, according to an analysis by the founder of Global Trade Research Initiative (GTRI) Ajay Srivastava.
Similarly, exports of diamonds, gold and products decreased 18.78% during that period to $32.85 billion while imports rose 21.25% to $78.47 billion, reflecting shifting dynamics in luxury and investment goods markets. A big proportion of gold and diamonds and their products which enter India gets consumed locally; only around 35% or less of it is processed for export as jewellery, according to GTRI.
The five years from 2018-19 to 2023-24 saw two years of COVID, conflicts in Ukraine and Middle East and now the Red Sea crisis. In these five years India’s total merchandise exports increased by 32.41% to $437.07 billion while imports rose 31.39% to $675.44 billion. These years also saw China emerging as India’s trading partner in terms of merchandise imports and exports at $ 118.4 billion. China is closely followed by the US with trade at $ 11.3 billion.
The better performing sectors during the period under review are electronics and telecom products, agriculture products, metals and ores and chemicals. The sectors that are inputs for manufacturing did well both on the export and import front, according to the GTRI analysis.
Exports of electronics, computer and telecom products surged by an impressive 170.32% to $34.41 billion, and imports grew by 52.37% to $79.31 billion. Agriculture, meat and processed food products exports grew 32% to $48.30 billion in FY 2024 while Imports in this sector rose 63.93% to $31.97 billion.
Exports of ores, minerals and petroleum increased 80% to $ 94.04 billion while imports went up to $230.18 billion, a 31.55% rise, indicating strong domestic demand for these resources.
Machinery exports were up 43.37% to $30.06 billion and imports were up 30.97% to $57.42 billion, reflecting increased investment in manufacturing capabilities. Chemicals and pharma exports increased 32% to $60.94 billion while imports rose from 26.2% to $62.89 billion, underscoring a steady growth in both domestic production and consumption.
Auto sector exports saw a moderate increase of 15.47% to $20.90 billion and imports grew by 23.56% to $7.61 billion, showing growth in both production and market expansion. The auto sector is the only major sector that is exporting much more than it is importing.
Following China and the US, other trading partners in the top five are UAE, Russia and Saudi Arabia. Russia has entered in the top five due to oil trade.