Over the past two decades, India has seen a substantial increase in its contribution to global trade, with both its exports and imports doubling during this period. According to a report by the National Stock Exchange (NSE), India’s share in global merchandise exports grew from 0.9 per cent in 2005 to 1.8 per cent in 2023. Additionally, India’s share in services exports more than doubled, rising from 2 per cent to 4.3 per cent. Overall, India’s export share increased from 1.2 per cent in 2005 to 2.4 per cent in 2023. This growth has been attributed to factors such as robust trade agreements, a diversified export portfolio, improved logistics infrastructure, and government initiatives like the Make in India campaign and the Production-Linked Incentive (PLI) scheme.
Notably, India’s performance in services exports has outpaced its performance in goods exports. The report reveals that India ranks 16th globally in merchandise exports and seventh in services exports. Services exports account for 43.8 per cent of India’s total exports, the highest share among major global economies, compared to the global average of 24.7 per cent. This highlights the strength of India’s services sector and its competitive advantage in industries like IT, financial, and consulting services.
While India’s export growth was robust in the first two decades post-liberalization, with a Compound Annual Growth Rate (CAGR) of 11.1 per cent during FY94 to FY04 and 17.3 per cent during FY04 to FY14, the last decade has seen a significant moderation in export growth. Export growth slowed to a CAGR of 3.3 per cent in the last decade, mainly due to subdued global demand, trade protectionism, and disruptions like the COVID-19 pandemic and geopolitical tensions. However, services exports have sustained a higher CAGR of 8.4 per cent in the last decade, reflecting India’s comparative advantage in certain sectors.
India’s Relative Comparative Advantage (RCA) lies in key sectors such as agriculture, textiles, chemicals, and pharmaceuticals, according to the report. However, the country lags in machinery, transport equipment, and electronics, indicating areas for further development and focus. The report also highlighted global trade dynamics, noting that China’s share in global merchandise exports has increased significantly over the past two decades, largely at the expense of traditional export leaders like Japan, Germany, France, the UK, and the USA.
In the services sector, India and Singapore have improved their shares, while the USA has experienced a decline. As global trade continues to evolve, India’s focus on enhancing its export competitiveness, diversifying its export baskets, and developing its logistics infrastructure will be critical in sustaining and furthering its growth trajectory. Initiatives like Make in India and the Production-Linked Incentive (PLI) scheme are expected to play a key role in supporting India’s export growth in the coming years.
