New Commerce Minister Suresh Prabhu: Exports share in GDP must improve

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New Delhi | Published: September 7, 2017 4:58:28 AM

The share of exports in India’s gross domestic product (GDP) needs to improve significantly, new commerce and industry minister Suresh Prabhu said on Wednesday, setting it as a priority area for him amid a slowdown in growth in outbound shipments.

Suresh Prabhu, exports, GDPSuresh Prabhu said the ministry will work on promoting farm exports and will ensure a global market for farmers. (PTI)

The share of exports in India’s gross domestic product (GDP) needs to improve significantly, new commerce and industry minister Suresh Prabhu said on Wednesday, setting it as a priority area for him amid a slowdown in growth in outbound shipments.

Exports growth has been slowing down consistently since April, although the phase of contraction noticed between November 2014 and May 2016 is well over. The exports-to-GDP ratio fell to 19.4% in Q1 FY18 from 21% in the previous quarter, showed the latest GDP data.

“Exports-to-GDP ratio of India has to substantially improve and exports have a great ability to generate economic activity on its own,” Prabhu told reporters in New Delhi.

According to the second volume of the Economic Survey for 2016-17, exports need to grow at 26.5% annually for the next five years for India to reach a “respectable’’ 5% share in world trade from the existing 1.7% it has been stuck at since 2011. This could be achieved only through reforms in trade policy by diversifying exports, rationalising tariffs and developing worldclass export infrastructure, it added. India’s exports grew 4.7% in 2016-17 after two years of continuous decline.

Exports contributed 0.4 percentage point to GDP growth in 2016-17, helped by a turnaround in merchandise export performance after contraction in the previous year.

Prabhu said the ministry will work on promoting farm exports and will ensure a global market for farmers.

“When agricultural production goes up, prices fall. Prime Minister Narendra Modi has aimed at doubling farmers’ income by 2022. Agricultural products have a limited shelf life and, therefore, incomes of farmers also need to rise in the short time… have told the department to prepare an agricultural export policy,” he said.

India’s farm exports touched $33.4 billion in 2016-17, up from $32.1 billion in the previous fiscal but well below the level of $42.9 billion recorded in 2013-14, showed the official data.

Prabhu also said the ministry will focus on promoting exports and look into issues exporters are facing due to the GST regime.

The minister said he would soon be meeting trade ministers in Manila and Seoul to promote trade.

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