September 3, 2021
The demand for steel is also seen to have contributed to the growth in exports. However, experts remain cautious.
Textiles, gold, pharmaceuticals and plastics have contributed to 80% of the export mix as of August 2021.
) Gold exports can be expected to reach US$ 400 billion in FY2022 as per expert opinion.
July 2020 saw broad-based export growth owing to the opening up of the economy.
Merchandise exports have registered a year-on-year growth of 45.17% in August 2021, fuelled by an increase in demand for gold, pharmaceutical products, textiles, plastics and cotton. These commodities contributed to 80% of the nation’s exports during the period. Gold imports exhibited a month-on-month increase of 82.22% and non-gold, non-oil commodities exports grew to US$ 26.36 billion during the same period. If the growth trajectory continues favourably, industry leaders are optimistic about gold exports advancing towards a target of US$ 400 billion in FY2022. It is also to be noted that the trade deficit widened to US$ 13.87 billion in August, marking a four-month high.
However, experts worry that the current demand cycle could be closely followed by a slump owing to discrepancies in the Remission of Duties and Taxes on Exported Products (RODTEP) rebates and uncertainties in the global supply chain. Commodities including chemical, steel, and pharmaceutical products require rebates in order to contribute towards export growth and hold their own in a highly competitive global market. Additionally, the export predicament is compounded by a shortage of waterway containers for commodity exports as well as customs-based hold-ups of containers in international ports. These factors are bound to have an impact on the quantity and pace of exports.
Since July 2020, a growth in domestic demand has been correlated with an increase in the export of commodities. However, much more is required to be done in order to wean multiple sectors of the economy from a heavy dependence on imports for inputs and intermediary goods. As a broad-based growth in exports has become more evident since the opening of the economy, it is imperative that all strategies be focused on bolstering export growth.