India’s exports to eight of its top 15 markets are trailing the official targets. Nonetheless, the country is still on course to realise its lofty goal of shipping out merchandise worth $400 billion in FY22, as despatches to some other economies beat expectations, reflecting deeper market penetration.In an unusual move, the commerce ministry this year fixed targets for each of the top 30 markets, instead of restricting the practice to a few or setting just a full-year goal.
The ministry then followed it up with regular meetings with stakeholders and overseas missions for targeted interventions to enable exporters to better cash in on a global industrial resurgence, an official source told FE. In the first seven months of this fiscal, exports to the UAE, Singapore, the UK, Netherland, Germany, Nepal, Malaysia and Turkey were in the range of only 32% to 54% of the full-year target. Exports to three economies — Turkey, Malaysia and the UAE — did falter more dramatically, achieving just 32-44% of the full-year aim.
In a business-as-usual scenario, actual outbound shipments until October should have exceeded 55-58% of the full-year target, analysts said.They blamed persistent supply-chain bottlenecks, Covid-related curbs (especially in parts of Europe) and frosty political ties for the lower-than-expected exports to these economies. The top 15 markets are expected to fetch $246 billion in FY22, or 61% of the overall target of $400 billion.
However, robust exports to other important markets–including the US, China, Bangladesh, Belgium, Saudi Arabia and Indonesia—almost offset the shortfall. Exports to these markets remained in the range of 62% to 71%. On top of this, outbound shipments to some others among the top 30 destinations, such as Korea, Brazil, Italy and Japan, too, remained strong. In the first seven months of this fiscal, goods exports hit as much as $234 billion, almost 59% of the full-year target.
“This suggests that the ambitious target of $400 billion for FY22 is attainable and a sustained increase in exports in the coming years is possible with a little bit of extra effort. Exports to some of the markets after the pandemic did surprise on the upside,” said an official. “What is more important to note is that the geographical spread of Indian exports is improving, which is a good sign.”
Merchandise exports fluctuated between $250 billion and $330 billion since FY11; the highest export of $330 billion was achieved in FY19. However, having successfully weathered the damage caused by two Covid waves, Indian exporters face fresh uncertainties now from the emergence of a new Covid variant in Africa that can further disrupt the already-burdened global supply chains. A slowdown in export growth in November amid persistent bottlenecks in the supply-chain, such as elevated shipping costs and container shortage, brings to the fore fresh risks. Having hit a monthly record of $35.7 billion in October, merchandise exports hit $30 billion in November.
Exports still registered a 27% rise in November from a year before but it was the lowest growth rate this fiscal. Adding to exporters’ woes, the Omicron variant hammers travel in Europe, a major market. China, another key market, has also seen a spike in Covid cases of late. While some experts have suggested against undue anxiety over the ferocity of the new strain, some others have advised a cautious approach.