India’s Export Growth: Services and Diversification and

New Delhi, Jul 22 (PTI) Indian exporters are adding more geographies to promote their outbound shipments and tide over challenges posed by global uncertainties triggered by geopolitical tensions, the Economic Survey 2023-24 has shown.

Given the current geopolitical dynamics, India is expected to benefit from its strong trade relations with other countries, the report said.

India maintains broad and diverse trade relations with Asia, Europe and the US.

It also said the country’s external sector remained strong despite ongoing geopolitical headwinds and persistent inflation.

“India is adding more export destinations, indicating regional diversification of exports,” the study said.

According to government data, the share of the top 10 countries in India’s merchandise exports is showing a downward trend, falling from 61.9 percent in FY 2000 to 50.5 percent in FY 2024.

After FY 2000, countries in Asia, Africa and the Middle East such as the UAE, Singapore, Hong Kong and China have emerged as export destinations. These countries have replaced traditional export partners such as the United Kingdom, Germany and Belgium.

The combined share of the developing regions, namely Asia and Africa, in India’s total exports increased from about 42.9 per cent in 1999-2000 to 52 per cent in 2023-24.

In the last fiscal year, the UAE, Singapore, China, Russia and Australia were India’s top export partners.

Cumulatively, merchandise exports rose 5.84 percent to $109.96 billion in April-June this fiscal year, while imports rose 7.6 percent to $172.23 billion.

The trade deficit widened to $62.26 billion in the April-June 2024 period, compared with $56.16 billion in the same period last year.

India’s share of global merchandise exports stood at 1.8 percent in 2022, compared to 1.6 percent in 2020.

The country’s share of global services exports also rose from an average of 3.3 percent in fiscal years 2016-2020 to 4.3 percent in 2022-2023.

The Commerce Department is targeting USD 800 billion in goods and services exports this fiscal year, up from USD 778 billion in 2023-24.

“India’s US dollar-denominated services exports grew at a robust compound annual growth rate (CAGR) of over 14 per cent over the past 30 years (1993-2022), significantly higher than the growth of India’s goods exports (10.7 per cent) and global services exports (6.8 per cent),” the study said.

The country is now the seventh largest services exporting country in the world, a huge increase from its 24th position in 2001.

India ranks 2nd in the world in exports of telecommunications, computer and information services, 6th in exports of personal, cultural and recreational services, 10th in provision of transportation services and 14th in travel.

“India’s strong integration into the global software industry value chains has led to a change in the composition of its services exports,” the report said.

Moreover, India’s greater integration into global value chains is boosting exports.

“Evidence of India’s increased participation in the global supply chain is reflected in the increased investments by foreign companies in electronics, apparel and toys, automobiles and components, capital goods and semiconductor manufacturing in India,” the report said.

The study found that four new free trade agreements were signed in the 2021-2024 period, after a gap of almost ten years.

“With free trade agreements in place with most East Asian partners, these new trade agreements focus on gaining access to Western and African markets, as well as potential partners that are complementary in terms of trade,” the report said.

India’s young population and growing middle class present an attractive market for Western free trade partners.

“One of the most important criteria for entering into cooperation with a Free Trade Agreement partner is to ensure that the trading partner is a natural partner in terms of trade complementarity,” the report said.