India’s gross domestic product (GDP), at current prices, stood at Rs. 51.23 lakh crore (US$ 694.93 billion) in the first quarter of FY22, as per the provisional GDP estimates for the first quarter of 2021-22. India’s trade and external sector had a significant impact on the GDP growth as well as expansion in per capita income.
According to the Ministry of Commerce and Industry, India’s overall exports between April 2021 and August 2021 were estimated at US$ 256.17 billion (a 44.04% YoY increase). Whereas overall imports between April 2021 and August 2021 were estimated at US$ 273.45 billion (a 64.18% YoY increase).
India’s merchandise exports between April 2021 and August 2021 were estimated at US$ 164.10 billion (a 67.33% YoY increase). Merchandise imports between April 2021 and August 2021 were estimated at US$ 219.63 billion (an 80.89% YoY growth).
According to Mr. Piyush Goyal, Minister for Commerce and Industry & Railways, the Government of India is keen to grow export and provide more jobs for young, talented, and well-educated people as well as for semi-skilled and unskilled workforce in India.
As of August 27, 2021, foreign exchange reserves in India stood at US$ 633.5 billion.
- In September 2021, India and the US introduced the ‘Climate Action and Finance Mobilisation Dialogue (CAFMD)’ to strengthen bilateral ties and boost climate initiatives and economic development.
- In September 2021, Defence Minister, Mr. Rajnath Singh, announced that India and Australia plan to explore new areas in the fields of artificial intelligence (AI) and unmanned vehicles.
- In September 2021, India and the US signed a project agreement for an air-launched unmanned aerial vehicle.
- In September 2021, the Union Cabinet approved a Memorandum of Understanding (MoU) between the Geological Survey of India (GSI), India, and the Joint Stock Company Rosgeologia, Russia, for collaboration in the field of geoscience.
- In September 2021, India and Germany had discussions to strengthen their cooperation in handling circular economy, waste management and issues related to climate change.
- In August 2021, the Union Cabinet approved an MoU between the Institute of Professional Accountants of Russia (IPAR) and the Institute of Chartered Accountants of India (ICAI) to strengthen bilateral alliance for advancements in accounting knowledge, professional accountancy training, technical research, professional ethics and professional & intellectual development.
- In July 2021, the Union Cabinet approved a Memorandum on Cooperation (MoC), between Japan Fair Trade Commission (JFTC) and Competition Commission of India (CCI), to encourage and strengthen alliance in the area of competition law & policy.
- In June 2021, India and Bhutan signed an MoU for developing alliances in the area of environment.
- In June 2021, Export-Import Bank of India (Exim Bank) announced that it extended a line of credit (LOC) worth US$ 100 million to the Sri Lankan government to fund solar energy sector related projects.
- In June 2021, India and Australia announced collaboration in cyber-enabled critical technologies, emphasising the need to boost critical information security infrastructure such as 5G telecom networks.
- In May 2021, Shahi Litchi, the season’s first consignment from Bihar was exported to the UK, boosting exports of GI certified products.
- In May 2021, India and Israel signed a three-year work programme (2021-2023) for cooperation in agriculture and to strengthen bilateral alliances.
- In May 2021, India and Oman renewed memoranda of understanding (MoUs) in areas of military and maritime collaboration.
- In May 2021, Alankit Imaginations Ltd. collaborated with Digital Swiss Gold (DSG) to allow users to trade in gold digitally in Switzerland.
Foreign Trade Policy
- In May 2021, the merchandise exports increased to US$ 32.27 billion, registering an increase of ~ 69% YoY and indicating broad recovery in the trade driven by strong performance of small businesses that accounted for ~50% of India’s merchandise exports. With the upcoming trade policy 2021-26, the government plans to increase merchandise exports with emphasis on the higher share of MSMEs.
- Foreign trade policy 2021-26 is expected to focus on MSMEs and new export potential. In March 2021, the central government announced plans to establish a new mechanism to increase import screening in order to protect domestic manufacturers. Details of the new screening process would be available in the foreign trade policy 2021-26, which is expected to commence next month.
- The available data would help domestic manufacturers analyse the market potential of such goods.
- The foreign trade policy 2021-26 is also expected to boost MSMEs and e-commerce exports and identify new sectors to boost domestic export.
- On December 2, 2020, a meeting of the Board of Trade (BOT) was held under the chairmanship of the Commerce and Industry Minister Mr. Piyush Goyal. Focus of the meeting was on the new Foreign Trade Policy (2021-26), and outlining policies and steps to drive domestic production and exports. Mr. Piyush Goyal said, “We look at a single window that can help us improve the ease of doing business. People worldwide should trust that they can come and buy property, get all the required approvals, participate in India's trade and industry, expand the manufacturing side and the network of services.”
- In the mid-term review of Foreign Trade Policy (FTP) 2015–20, the Ministry of Commerce and Industry enhanced the scope of Merchandise Exports from India Scheme (MEIS) and Service Exports from India Scheme (SEIS), increased MEIS incentive raised for ready-made garments and made-ups by 2% and raised SEIS incentive by 2% and increased the validity of Duty Credit Scrips from 18 months to 24 months. In April 2020, the Government extended FTP for one more year, up to March 31, 2021.
India is presently known as one of the most important players in the global economic landscape. Its trade policies, Government reforms and inherent economic strengths has attributed to its standing as one of the most sought-after destination for foreign investments in the world. Also, technological, and infrastructural development being carried out across the country augurs well for the trade and economic sector in the years to come.
The Government of India has been working on striking important deals with the Governments of Japan, Australia, and China to increase contribution towards the economic development of the country and growth in the global market.
India has a potential to increase its goods and services export to Australia to US$ 15 billion by 2025 and US$ 35 billion by 2035.
Note: Conversion rate used for September 2021 is Rs. 1 = US$ 0.014
Note: *The latest data for services sector released by RBI is for April 2021. The data for May 2021 is an estimation, which will be revised based on RBI’s subsequent release