As exports shrink amid global uncertainty, no clear target for 2023-24

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| Photo Credit: K.R. Deepak

With merchandise exports shrinking 15.1% in the first quarter of this year, after racking up a record $450 billion in 2022-23, the government is playing it safe on announcing a clear target for outbound shipments this year and is likely to opt for a range of scenario-based targets instead.

While the Commerce Ministry has undertaken an internal exercise to set a target for exports in 2023-24 — and has even communicated a number to export promotion councils of different industrial sectors as well as overseas diplomatic missions — there is now a rethink underway, a senior Ministry official indicated.

Shrinking exports

Goods exports had decelerated 12.6% in April and 10.2% in May, but recorded their steepest fall in 37 months this June with a 22% drop. The $32.7 billion export tally for last month was also the lowest in absolute terms since October 2022.

While the final June numbers for exported services are still awaited, forex earnings from these intangible exports have also slowed sharply after growing about 28% to $325 billion in 2022-23. As per estimates, services exports have grown just 5.2% to $80 billion, while goods exports stand at a little over $102 billion through the first quarter.

Different scenarios, different goals

“Our broader target for exports, as per the new Foreign Trade Policy, is to achieve $2 trillion by 2030, with services and goods exports accounting for a trillion dollars each. But the way things are shaping up so far, in line with the World Trade Organisation’s forecast of slower global trade growth in 2023, it is perhaps not right for us to set a singular target,” the official explained.

“We are waiting and watching. The first quarter numbers have given us some indication and we hope overseas orders start picking up. However, instead of a single target, an exercise is being done to formulate a range of possible export goals, based on scenarios such as the most optimistic scenario, a ‘business-as usual’ situation, and if there’s a persistently declining trend. So we need to wait for some more time,” the official emphasised.

On petroleum exports, which have seen the sharpest plunge of 33.2% in the first quarter, another official said that this was largely driven by the reduction in global oil prices. However, there is also some moderation in demand due to the price cap sanctions imposed on Russian oil shipments. Last year, petroleum exports had boomed as Indian firms processed and re-exported large volumes of Russian oil, he said.