Surge in Exports

It is celebration time at the Ministry of Commerce and Industry. The reason is the sudden surge in exports of goods and services in 2021–22 after registering a decline for two consecutive years. While the exports of goods zoomed by 43.8% to reach an all-time high of $419.7 billion in 2021–22, that of services rose by 20.9% to touch $249.2 billion. And the total exports of goods and services were valued at a humongous $668.9 billion after posting a 34.3% growth in 2021–22. However, these surging growth numbers hide more than they reveal. Because if one takes a three-year average to capture the impact of the fall in exports in the previous two years, the growth of goods, services, and the total exports in 2021–22 slump to 10%, 6.8%, and 8.5%, respectively. These are certainly decent figures, but no cause for any celebration.

Moreover, the surge in Indian exports is mainly due to global factors rather than the government trade policies. For instance, in the case of merchandise or goods exports, the flows initially rose at double-digit levels in the latter half of the last decade and then suddenly plunged in the last two years, with the exports even shrinking by 7.2% in 2020 following the disruptions caused by the pandemic. However, global exports then staged a marked recovery in 2021 by surging nearly 27%. This has also been reflected in the Indian goods exports that rose by a substantial 54.6% in 2021 after declining in the previous two years. Exports growth of the three largest global exporters—Germany, China, and the United States—was a modest 24.1%, 28.1%, and 23.9%, respectively. Although Indian goods exports surged the highest among the major economies in 2021, the country’s share in global exports rose by just 0.1% from 2.4% in 2019 to 2.5% in 2021, while that of China rose much faster from 9.6% to 10.5% during the same period.