India exports touch record high of $400 billion. All you need to know

India is still emerging from the aftereffects of a debilitating national lockdown imposed almost exactly two years back, but its exports are surging, at least on paper. 

The country has, for the first time since 2014, met the annual export target and crossed the crucial threshold of $400 billion for 2021-22. This is far higher than the previous record of $330 billion achieved in 2018-19. 

And none less than Prime Minister Narendra Modi acknowledged this fact. “India set an ambitious goods export target of $400 billion and achieved it for the first time. I congratulate our farmers, weavers, MSMEs, manufacturers and exporters for this success," he tweeted. 

Modi said the target was achieved nine days ahead of schedule. He tweeted that this translated to $33 billion worth of exports every month, $1 billion of exports every day, and $46 million worth of exports every day of the year.

But how did India manage to achieve this feat?

A steep rise in oil prices, across-the-board uptick in global prices of industrial commodities, a resurgent agricultural sector and a higher share of manufactured goods are the main reasons behind India reaching the export target.

What does the government data say?

The government said that, notwithstanding the challenges posed by successive waves of Covid-19, India’s merchandise trade performance has shown impressive growth and exports remained above $30 billion for 11 consecutive months (likely to be 12 consecutive months at the end of March) during April to February. In December 2021, India recorded the highest ever monthly merchandise exports recorded at $39.3 billion.

Cumulative exports rose about 46% in April-February 2021-22 to $374 billion from $256.5 billion a year earlier.

How are rising oil prices responsible for a spike in the export numbers?

Commodity prices remained high throughout 2021 and contributed significantly to the $400-billion target being reached. The Bloomberg Commodity Spot Index, which covers a broad basket of globally traded raw materials, has risen 45% over the past year and has shot to a 10-year high.

For instance, shipments of processed petroleum—India’s s single-largest export item with a 15% share in overall exports—doubled in the first 10 months of FY22 to $50.2 billion from $25.3 billion a year earlier as oil prices jumped because of rising demand and Russia’s invasion of Ukraine. Brent crude prices crossed $120 a barrel earlier this month, compared with around $60 per barrel at the start of the financial year in April 2021.

What about gems and jewellery, which India is a world leader in exporting?

Exports of gems and jewellery, the second-largest category, have risen to $32 billion this fiscal year, representing almost 8% of total exports.

Diamond exports climbed to $20.7 billion in the first 10 months of this fiscal year, up from $17 billion a year earlier, while jewellery shipments increased to $9.2 billion from $6.5 billion.

Which other categories are seeing an upsurge in exports?

Indian farmers should be a happy lot, at least for now. Their protests against the government throughout 2021 notwithstanding, agriculture and allied exports grew 24% in the first 10 months of the current financial year.

Commerce ministry data shows that exports of farm produce, both processed and unprocessed, climbed to $38.6 billion in April-January 2021-22 from $31.16 billion a year earlier. The government expects total exports from the sector this fiscal year to rise to $43 billion. 

Within the sector, exports of non-basmati rice, wheat, dairy items and sugar grew 40% each in April-January 2021-22, according to the Agricultural and Processed Food Products Export Development Authority (APEDA). Export of spices like cinnamon, ginger, cardamom, pepper, turmeric and saffron also grew substantially.

How are exports in the manufacturing sector doing?

India recorded electronics exports of $16.1 billion in April-January 2021-22, crossing the earlier high of $15 billion in 2019-20. Exports of mobile phones and components stood at $3.8 billion. Heavy machinery equipment exports stood at $20.5 billion and are likely to end the financial year above pre-pandemic levels.