Indian exports will likely grow at a double-digit pace in the current fiscal despite external headwinds like the global trade war, commerce secretary Anup Wadhawan said on Wednesday. However, to sustain or build upon the growth momentum in the coming years, exporters must move up the value chain, he added. The exports had grown just over 9% year-on-year in the last fiscal to a record $331 billion.
The secretary's statement comes as India's merchandise export growth collapsed to just 0.6% in April, 3.9% in May and -9.71% in June. However, this means the government is hopeful of achieving good growth in the remaining months of this fiscal. Citing persistent risks from a global trade war, the IMF recently trimmed its 2019 trade growth forecast by a sharp 90 basis points to 2.5% from its April projections, against the actual rise of 3.8% in 2018. This will weigh on the prospects of Indian exports as well.
Citing engineering exports from India, which account for a fourth of India's total outbound shipment, Wadhawan said it had been found that around 93-94% of total engineering exports comprised mainly low-to-medium value-added products. "This consistently erodes India's engineering export base as neither the cost of raw material nor labour remained cheap in India," he said after inaugurating the EEPC India Technology Centre in Kolkata.
The government has started consultation process for a new foreign trade policy (FTP), as the existing one is scheduled to expire in March 2020. India will have a revised foreign trade policy by the time RCEP comes to force.
The secretary said the US' withdrawal of duty benefits for select Indian products under the generalised system of preference (GSP) didn't have any material impact on our exports to the US. This is because such products made up for only 12% of our exports to the US and the duty benefit was only up to 4%. Exports to the US were 32% up in 2017 and the trend has been continuing; offsetting the loss incurred from the GSP.