• UGI USER
  • Nov 07, 2023
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India’s export slowdown

Q. Outline the reasons why India’s exports are slowing down. What are the measures that the government has taken to rectify it illustrated with relevant data?

Structure of Answer

Introduction

  • Mention India’s export slowdown with recent data

Body

  • Mention Reasons for India’s Slowing Exports with examples
  • Mention Government Measures to Boost Exports

Conclusion

  • Mention Need for Continued efforts to diversify exports, enhance infrastructure is essential to revitalize India’s export sector

Answer:

India’s export sector, which plays a vital role in the country’s economic growth, has been facing challenges with slowing exports. In 2022-23, while total goods exports rose 6% to $447 billion, exports other than petroleum products and gems and jewelry remained stagnant at $315 billion.

Reasons for India’s Slowing Exports

  • Global Economic Slowdown: The global economic slowdown has impacted international demand for Indian goods, affecting export growth.
  • Currency Fluctuations: Fluctuations in currency exchange rates have affected the competitiveness of Indian exports in global markets.
  • Lack of Export Diversification: India’s dependence on a few key sectors for exports, such as petroleum products and gems and jewelry, limits diversification.
  • Trade Barriers: Non-tariff barriers and protectionist policies in some markets pose challenges for Indian exports. g. European Union has imposed tariffs on Indian steel and leather exports.
  • Infrastructure Bottlenecks: Issues related to logistics, transportation, and port efficiency have hindered export growth.
  • Decline in Exports to China: Recurring lockdowns in China in 2022-23 significantly impacted India’s exports to the country, with a 28% reduction in overall exports and a 30% drop in non-petroleum and non-jewelry exports.

Government Measures to Boost Exports

  • Foreign Trade Policy (FTP) 2023: aims to boost Indian exports by emphasizing high-value SCOMET products, streamlining export schemes, promoting districts as export hubs, and enhancing ease of doing business for exporters.
  • Goods and Services Tax (GST) Refund Scheme: Provides refunds for integrated GST (IGST) paid on exports to incentivize manufacturers and exporters, encompassing various industries.
  • Merchandise Exports from India Scheme (MEIS): Offers duty credits on exports, reducing production costs and encouraging specified product exports.
  • Service Exports from India Scheme (SEIS): Provides duty credits for service exports, supporting IT, professional, and tourism services.
  • Export Promotion Capital Goods (EPCG) Scheme: Permits concessional duty import of capital goods, aiding in modernizing production facilities for competitiveness.
  • Special Economic Zones (SEZs): Designated areas with tax exemptions, duty-free imports, and eased procedures for boosting exports.
  • Export Promotion Councils: Supports industry-specific councils for market research, trade event organization, and export promotion.
  • Digital Initiatives: Platforms like the Government e-Marketplace (GeM) facilitate export opportunities and improve efficiency.

While India’s export growth faces challenges due to the changing global economic landscape and sectoral dependencies, the government’s measures to boost exports and promote a more conducive business environment are vital. Continued efforts to diversify exports, enhance infrastructure, will be essential to revitalize India’s export sector and foster sustainable economic growth.