India’s export trajectory encountered significant headwinds in the fiscal year 2023-24, with lacklustre performance witnessed in two of its largest markets, the United States and Europe.
Against a backdrop of declining global demand and geopolitical tensions, India’s export sector faced challenges, contributing to stagnant growth in key markets. Official data from the commerce ministry reveals that India’s overall exports experienced a modest decline of approximately 2.4% annually in value terms during FY24. Notably, exports to the United States contracted by 1%, while those to Europe saw a marginal increase of only 1.47%.
The composition of India’s export basket witnessed mixed fortunes, with certain sectors registering declines while others saw modest growth. Traditionally strong sectors such as gems and jewellery, ready-made garments, and chemicals experienced setbacks in exports to Europe, whereas engineering goods, petroleum products, pharmaceuticals, and electronic goods recorded marginal upticks. The subdued export performance to Europe and the United States can be attributed to a confluence of factors, including geopolitical uncertainties, rising energy prices, and disruptions in global supply chains. Tensions in strategic regions such as the Red Sea have exacerbated transportation costs and posed challenges to trade routes vital for exports to Europe. Similarly, India’s exports to the United States faced headwinds amid geopolitical tensions and evolving trade dynamics. Despite slight increases in certain sectors such as drugs & pharmaceuticals and petroleum products, declines were observed in segments including gems and jewellery, engineering goods, and ready-made garments.
The overall trade landscape for India in FY24 was influenced by a multitude of global events, including the ongoing Russia-Ukraine conflict, US-China trade tensions, and proposed regulatory measures by the European Union. These external factors have compounded challenges for Indian exporters, necessitating agile strategies to navigate evolving trade dynamics. While the World Trade Organization forecasts a gradual recovery in global goods trade during 2024, downside risks persist due to regional conflicts and economic uncertainties. India’s trade deficit, encompassing both merchandise and services, witnessed a contraction in FY24, offering a glimmer of optimism amidst prevailing challenges. Moving forward, India’s export sector must prioritise sectoral competitiveness, diversification of services, and initiatives to improve the ease of doing business. Addressing systemic bottlenecks and leveraging emerging opportunities in global value chains will be crucial to revitalising export growth and enhancing India’s resilience in an increasingly volatile global trade landscape.
