The country’s exports in December 2021 surged 38.91 per cent on an annual basis to USD 37.81 billion due to healthy performance by sectors such as engineering, textiles and chemicals, even as the trade deficit widened to USD 21.68 billion during the month, government data showed on Friday. Imports in December 2021 too increased 38.55 per cent to USD 59.48 billion. During April-December 2021-22, exports rose 49.66 per cent to USD 301.38 billion.
Imports during the period surged 68.91 per cent to USD 443.82 billion, leaving a trade deficit of USD 142.44 billion, the data showed. “Merchandise exports in December 2021 were USD 37.81 billion, as compared to USD 27.22 billion in December 2020, exhibiting a positive growth of 38.91 per cent. As compared to December 2019, exports in December 2021 exhibited a positive growth of 39.47 per cent,” the commerce ministry said in a statement.
The country’s exports are expected to register healthy growth rate in the financial year 2022-23 and might touch USD 530 billion as exporters are “flushed” with orders, the Federation of Indian Export Organisations (FIEO) said on Wednesday. It added that additional exports will come from some of the PLI (production-linked incentive) sectors in the next fiscal.
“Since India will be adding over USD 130 billion or so in the current fiscal, we should aim to build on the same and thus aim much higher.
“Since we are likely to cross USD 400 billion in 2021-22, we should focus and aim for exports in the vicinity of USD 525-530 billion in 2022-23,” FIEO President A Sakthivel said in a statement.
He said exporters across sectors are flushed with orders for the next fiscal , which will push the growth prospects in the next fiscal.
India is on track to meet an ambitious export target of $400 billion this fiscal. No doubt, what is aiding this effort is the focused drive of the Union commerce ministry to fix targets for each of the top 30 markets instead of only setting a full-year-goal. As this newspaper has reported, the ministry has followed it up with regular meetings with stakeholders and overseas missions for interventions to enable exporters to benefit from the recovery in global trade. In the first seven months of this fiscal, outbound shipments ideally should be 55-58% of the full-year-target. By this reckoning, exports to UAE, Singapore, UK, Netherlands, Germany, Nepal, Malaysia and Turkey fell short, achieving 32-44% of the full-year target. This was offset by robust growth in shipments to US, China, Bangladesh, Belgium, Saudi Arabia and Indonesia, by 62-71%. India’s overall exports thus hit $234 billion during April-October 2021 or 59% of the full-year target.
What will definitely bolster India’s export drive to its top 30 markets are free trade agreements (FTAs) with the US, European Union, UAE, the UK and Australia, for instance. The higher level of ambition in this regard was flagged by BVR Subrahmanyam, commerce secretary, when he cautioned India Inc to brace for competition as the country was going to sign “very deep” FTAs. “To make FTAs realistic and compliant with World Trade Organization norms, we need to have at least 90% of trade covered under substantial liberalisation. We can’t be cherry picking. It will be a deep integration of economies. There will be some sensitive lines, of course. In the Indian context, dairy, for example, is a sensitive area. By and large, these are going to be very deep FTAs,” he stated while addressing Confederation of Indian Industry’s Partnership Summit.
This higher level of ambition should be welcomed as India has not signed any major FTA in the last 10 years. Despite the intent to ink deep agreements, India remains ambivalent about full-fledged FTAs due to higher domestic tariffs in some of the most trade-dynamic sectors and manufacturing as a whole. For such reasons, India in the past has hesitated to offer “substantially all trade” interpreted as “80-85% or more” preferential tariff line liberalisation in its FTAs and settled for limited deals according to professor Amita Batra of the Jawaharlal Nehru University. India and Australia thus have decided to expedite negotiations for an interim agreement.
The passage to a full-fledged FTA with Australia, however, is far from easy. Bilateral negotiations have been ongoing since 2011 and an important sticking point is India’s reluctance to open up its market for farm and dairy products. The domestic dairy industry’s apprehensions of stiff competition in milk and milk products from Australia and New Zealand were responsible in large part for India to walk out of the Regional Comprehensive Economic Partnership. As Australia and New Zealand are part of this regional grouping, a full-fledged FTA with India would necessarily entail the latter making a similar level of preferential tariff line liberalisation. Australia, Brazil and Guatemala also secured a WTO ruling in their favour, that India’s price support to sugarcane farmers violates the Agreement on Agriculture. FTA negotiations entail a process of give and take for greater access to each other’s markets. If India seeks greater market access, it must also allow partners to sell more of their goods and services .The need is to mutually lower tariff and non-tariff barriers for trade to be a win-win situation for both partners so that FTAs can boost India’s outward shipments manifold to its top 30 markets in the future.
After staging a strong recovery from COVID-induced slowdown in 2021, India’s exports are likely to extend the growth story to the New Year also on increased demand in the global markets, boost in domestic manufacturing due to production-linked incentive schemes and implementation of some interim trade pacts.
Expectations of positive growth in the country’s exports are also backed up by the outlook of the World Trade Organisation (WTO) which predicts a 4.7 per cent expansion in the global merchandise trade volume in 2022.
Exporters believe that the outbound shipments would cross USD 400 billion mark in this fiscal going by the current momentum and may reach USD 475 billion in 2022-23.
However, the growth and global demand will also depend on whether the countries would be able to contain Covid-19 and the new variant Omicron through massive vaccination worldwide, they suggest.
According to a Reserve Bank of India survey, released in September, exports of software services, including services delivered by foreign affiliates of Indian companies, stood at USD 148.3 billion in the fiscal year to March 31, 2021. This is more than USD 145.3 billion the world’s top oil exporter, Saudi Arabia expects from oil sales in 2021.
With the largest engineering population in the world, the software export story was seeded about four decades ago and has huge potential to go up further. But software exports are just a part of India’s export-led growth story which is gaining momentum.
Commerce Secretary BVR Subrahmanyam said that the world respects India as a trusted global business partner now and the country’s exports are growing in regions including the Middle East, Arica and South American nations, besides India’s traditional destinations.
“An intense review and monitoring at macro and geographical levels are helping to find new areas of trading relationships. Various measures to improve ease of doing business, incentivisation schemes like PLIs, rationalisation of duties is facilitating the trade like never before,” he told PTI.
To boost exports, the government has taken several measures such as notifying RoDTEP (Remissions of Duties and Taxes on Exported Products) rates, and releasing Rs 56,027 crore against pending tax refunds of exporters and steps to promote ease of doing business, the secretary added.
Subrahmanyam said that a series of measures by the central government and the resilience of Indian exporters have helped in registering record growth in exports so far.
According to another senior official, the Department of Commerce is working on the new Foreign Trade Policy (FTP) and aggressively negotiating Free Trade Agreements (FTAs) with key trading partners including the UAE, the UK and Australia and these measures would help in registering record growth in exports in “next year as well”.
The centre has implemented a series of steps to promote exports of both goods and services and that includes the introduction of RoDTEP and Rebate of State and Central Levies and Taxes (RoSCTL) Schemes, the launch of Common Digital Platform for Certificate of Origin to facilitate trade and increase FTA utilization by exporters, promoting districts as export hubs by identifying products with export potential in each district and addressing bottlenecks, and promoting ease of doing business.
The recently introduced PLI schemes will also support growth in the New Year, particularly in mobile, electronics and drugs and pharma sectors as incremental production will push additional exports as well.
According to Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai, much will depend on whether “we would be able to contain Covid-19 through massive vaccination across the globe and be able to create required capacity”.
This will decide whether the country should look for 15-20 per cent growth or even more and looking into the emergence of new variants and supply-side challenges at this point of time, “we would like to be a little conservative and will aim for an export of USD 460-475 billion in 2022-23,” he said.
Sahai added that while the demand side of exports should be taken care of by the industry, industry and the government should work together to address the supply side challenges.
“An increase in the prices of inputs, skyrocketing freight and delays in shipments and payments have resulted in the need for additional credit. Unfortunately, additional credit requires additional collateral as well by the banks. The government may consider giving a push to container manufacturing in the country as we require a large number of containers for inland coastal shipping,” he suggested.
Since January this year, exports are mostly recording double-digit growth on account of a low base. In 2020, exports were hit hard by the impact of the Covid-19 pandemic.
Rising imports of gold and crude oil have pushed the country’s imports and widened the trade deficit (difference between exports and imports). The trade deficit touched a record USD 23.27 billion in November.
Leading exporter and founder chairman of Technocraft Industries India Sharad Kumar Saraf said that as the Indian economy is reviving at a faster pace, imports are rising.
“Exports will do better in 2022 on account of health demand in global markets, Customers who have moved out from China are looking at India. Schemes like PLI will start yielding fruits from the new year,” Saraf said.
Ludhiana-based Hand Tools Association President S C Ralhan also said that exports would do good in the new year, but the government should take immediate steps in containing rising shipping rates and raw material prices.
Promoting exports helps a country create jobs, boost manufacturing and earn more foreign exchange.
The Commerce Ministry’s foreign trade arm DGFT will deactivate all importer-exporter codes (IECs) that have not been updated after January 1, 2014, with effect from December 6, 2021, a move which would help in knowing the actual number of real traders in the country.
The Importer-Exporter Code (IEC) is a key business identification number that is mandatory for exports or imports. No person shall make any import or export except under an IEC number granted by the DGFT.
On August 8, this year, the Directorate General of Foreign Trade (DGFT) had directed all IEC holders to ensure that details in their IEC are updated electronically every year during the April-June period.
“All IECs which have not been updated after January 1, 2014 shall be deactivated with effect from December 6, 2021,” according to DGFT’s trade notice. The IEC holders who have not yet updated the relevant information can do that till December 5.
IEC that would be deactivated, would have the opportunity for automatic re-activation after December 6. For that, a trader would have to navigate to the DGFT website and update their relevant information.
“Upon successful updation, the given IEC shall be activated again and transmitted accordingly to the Customs system with the updated status,” the notice said. According to an industry expert, de-activation of IECs helps in reducing the base load of the directorate and it helps in knowing the actual number of real exporters and importers in the country.
The nature of the firm obtaining an IEC includes proprietorship, partnership, LLP, limited company, trust, and society. After the introduction of GST (Goods and Services Tax), the IEC number is the same as the PAN of the firm.
Talks for the proposed free trade agreements (FTAs) with countries, including Australia, the UK and the UAE, are moving at a fast pace and these pacts, when implemented, would help provide greater market access to domestic goods, Commerce and Industry Minister Piyush Goyal said on Sunday.
Under a free trade agreement, two trading partners reduce or eliminate customs duties on the maximum number of goods traded between them. Besides, they liberalise norms to enhance trade in services and boost investments.
Goyal said that talks for such pacts are going on with Australia, UAE, GCC (Gulf Cooperation Council), European Union, Israel and the UK.
Member countries of GCC are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (UAE).
When these agreements would be finalised, it would provide “greater access to our manufactured goods as there will be less or zero customs duties,” the minister said at Vaishya Samaj Sammelan.
He also said that Uttar Pradesh plays a key role in promoting the country’s exports.
The country’s premier container port JNPT has reported 40.40 per cent growth in container traffic at 2,703,051 TEUs in the first half of the fiscal over 1,925,284 TEUs handled in the same period of FY21, according to a release on Monday.
Jawaharlal Nehru Port Trust (JNPT) during this period reported a rail coefficient at 18.04 per cent, it said.
The total container traffic handled in September stood at 452,108 TEUs, seeing a spike of 18.86 per cent over the same month of last year, according to JNPT.
The Nhava Shewa International Gateway Terminal (NSIGT) crossed the 1-lakh TEUs mark in a month by handling 1,00,814 TEUs in September-2021, the highest ever TEUs handled since its inception, it said.
JNPT operates five container terminals: The Jawaharlal Nehru Port Container Terminal (JNPCT), the Nhava Sheva International Container Terminal (NSICT), the Gateway Terminals India Pvt Ltd (GTIPL), Nhava Sheva International Gateway Terminal(NSIGT) and the newly commissioned Bharat Mumbai Container Terminals Private Limited (BMCTPL).
Sanjay Sethi, IAS, Chairman, JNPT, said, “JNPT has been undertaking various measures to ensure the port is at par with technologically advanced global ports.”
He said the port commenced dwarf container train services from which is a pivotal step towards streamlining the rail movement of export-import (EXIM) cargo via double-stacked dwarf containers, he said.
This will provide the EXIM community a competitive cost advantage by lowering hinterland logistical costs, while simultaneously enhancing rail-cargo traffic at JNPT, Sethi said.
Likewise, in a technological push, JNPT installed two mobile x-ray scanners at NSICT and APMT to give the security agencies an advantage of taking appropriate action before the container is allowed to exit and enhance our efficiency and considerably reduce import dwell time due to independent scanning facilities for each Terminal, he stated.
After a Covid-induced fall of 7% last fiscal, exports this fiscal have been supported by improved order flow from advanced markets following an economic resurgence there and rise in global commodity prices.
Merchandise exports could hit a record $190 billion or even cross this level in the first half of FY22, commerce and industry minister Piyush Goyal said on Thursday. While the export would be 51% higher than a year before, aided by a conducive base, it would also exceed the pre-pandemic (same period in FY20) level by 19%.
Addressing exporters in Mumbai, the minister said exports already hit $185 billion by September 21 this fiscal and exuded confidence that the country would realise the ambitious target of $400 billion in FY22.
After a Covid-induced fall of 7% last fiscal, exports this fiscal have been supported by improved order flow from advanced markets following an economic resurgence there and rise in global commodity prices.
Commenting on industry demand for regulating shipping costs and curb the recent surge, the minister indicated that any such step could act both ways. When costs will go down, the shipping lines and others would urge the government to do something as well, he explained, indicating that market-driven rates usually work better. Moreover, the surge in shipping costs is a global phenomenon, and not peculiar to India. Goyal said the government is also liberalising the rules to promote exports from special economic zones (SEZs).
As such, amid the surge in shipping costs, the government recently extended some relief to exporters of specified select products by reintroducing the Transport and Marketing Assistance (TMA) scheme, with wider coverage and much larger support, for one year.
Under the TMA, which was valid up to March 2021, the government reimbursed exporters a certain portion of freight charges and offered assistance for the marketing of select agricultural produce. Rates of assistance have been increased by 50% for exports by sea and 100% for those by air.
The minister also said permission to allow e-commerce seamlessly for artificial jewellery up to $800 are under consideration. Moreover, he is “fighting hard” for the gem and jewellery sector to get a waiver from the 5% duty that is currently charged in the UAE, as part of the proposed free trade agreement with the UAE.
Meanwhile, speaking at the National Institute of Industrial Engineering (NITIE) in Mumbai, Goyal said India is at a “nascent stage” in industrial engineering study and research, which is essential for creating robust supply chains.
At $47.1 billion, imports, too, staged a smart rebound and grew 51.7% from a year ago and 18.2% from August 2019, signalling a broader trade recovery, according to the provisional estimates released by the commerce ministry on Tuesday.
Merchandise exports shot up 45.8% in August to $33.3 billion y-o-y, supported by a conducive base, improved order flow from western markets and elevated global commodity prices. Exports also saw a 28% jump over the pre-Covid (same month in FY20) level, as a resurgence in advanced economies bolstered demand for goods. At $47.1 billion, imports, too, staged a smart rebound and grew 51.7% from a year ago and 18.2% from August 2019, signalling a broader trade recovery, according to the provisional estimates released by the commerce ministry on Tuesday.
Merchandise exports have now exceeded the pre-Covid level for six months in a row. Exports between April and August hit $164.1 billion, up 67.3% from a year ago and 23.3% from the same period in FY20. The provisional growth rates of both exports and imports are slightly higher than the ministry’s preliminary estimates released earlier this month. Trade deficit rose to a four-month high of $13.8 billion.
Of course, as analysts have pointed out, export growth had remained subdued even before Covid — outbound shipments rose about 9% in 2018-19 but again shrank by 5% in 2019-20. So, only a sustained uptick over the next few years would help India recapture the lost heights.
Importantly, core exports (excluding petroleum and gems and jewellery) rose 31.9% in August from a year ago, lower than the 46% growth in overall merchandise exports, mainly due to a rise in global crude oil prices and resurgence in gems and jewellery exports after last year’s decline. Nevertheless, the growth remains encouraging, given the supply challenges. Also, it was 28.7% higher than the level in August 2019.
Similarly, core imports (excluding petroleum and gold) rose 37.3% y-o-y and 4.3% from the pre-Covid level. Brent crude prices surged by 58% in August from a year earlier.
Total goods imports in the April-August period stood at $219.6 billion, up 80.9% from a year ago but only 4.4% from the pre-Covid level. Among the key performers on the export front, outbound shipment of petroleum products surged by 144% in August, gems & jewellery 88%, engineering goods 59%, cotton yarn, fabrics, made-ups and handloom products 55% and electronics 32%.
Similarly, imports of metaliferrous ores and other minerals jumped by 238% in August, followed by iron and steel (109%), pearls, precious and semi-precious stones (93%), gold (82%), petroleum (81%) and coal (79%).
To control rising edible oil prices during the festival season, the base custom duties on palm, soyabean and sunflower oils have been reduced further, bearing a revenue loss of Rs 1,100 crore, the government said on Saturday.
The move, industry said, could bring down retail prices by Rs 4-5 per litre.
The custom duties have been reduced on both crude and refined variants of these three cooking oils, according to a release by the Consumer Affairs, Food & Public Distribution. But the agri-cess on crude palm oil has been increased from 17.5 per cent to 20 per cent, it said.
The finance ministry has notified the cut in customs duties of these oils effective from September 11 till further orders, it added.
As per the finance ministry notification, the base import tax on crude palm oil has been reduced to 2.5 per cent from 10 per cent, while the tax on crude soyabean oil and crude sunflower oil has been reduced to 2.5 per cent from 7.5 per cent.
With this reduction, the effective duty on crude palm oil, crude soyabean oil and crude sunflower oil will come down to 24.75 per cent, whereas effective duty on refined palm oil, soyoil and sunflower oil will be 35.75 per cent.
The move comes amid an unabated rise in edible oil prices in India — which imports 60 per cent of its demand — despite several recent government measures.
The Food and Consumer Affairs Ministry said due to the international prices, “domestic prices of edible oils have been ruling high during 2021-22 which is a cause of serious concern from inflation as well as consumer’s point of view.”
Import duty on edible oils is one of the important factors that impacted landed cost of edible oils and thereby domestic prices, it said.
Import duty on edible oils was reduced a few months back and has further been slashed now to boost domestic supply and check price rise.
And with an additional estimated Rs 3,500 crore revenue loss from earlier reduction of custom duties on these oils, the government will bear a total loss of Rs 4,600 crore which is expected to be passed on to the consumers, it added.
Solvent Extractors’ Association of India (SEA) executive director B V Mehta told PTI that the fresh round of cut “could bring down the retail prices by Rs 4-5 per litre.”
It is also generally seen that prices harden in the international market after India reduces its import duty so the real impact could be Rs 2-3 per litre only, he said and added the government should have reduced import duty on mustard (rapeseed) oil as well to cool prices.
Retail edible oil prices in the country have increased in the range of 41 to 50 per cent in the last one year.
To control prices of edible oils, the ministry has not only directed states to take action against hoarding at the level of wholesalers, millers and refiners by asking them to disclose their stocks, but also asked retailers to display prominently the prices of all edible oil brands for the benefit of consumers.
“…. Some states have already notified that they (retailers) have to simply display at what rate it is available. Then it is a consumer’s choice to make a choice whether to buy x or y brand depending on his own preference,” Union Food Secretary Sudhansu Pandey told media after a meeting with states officials and industry stakeholders held on Friday.
Consumers can choose the cheaper one and brands will also be under pressure to reduce prices, he had said, adding that the state governments will enforce the requirement of displaying the prices.
Total import of vegetable oils (edible and non-edible oil) during November 2020 to July 2021 fell by 2 per cent to 96,54,636 tonne, compared to 98,25,433 tonne in the corresponding period of the previous oil year (November-October), according to the SEA data.
Edible oil is India’s third-largest imported commodity after crude oil and gold.