Context: India’s goods exports for 2022-23 scaled up significantly from earlier estimates to almost $451 billion, indicating a 6.9% year-on-year growth. Similarly, the import bill as per the May 1 statement was pegged at $711.85 billion.
Experts have flagged petroleum shipments as the main driver for the high revisions of recent export data.
Source: PIB
Major exports from India:
Export trends in India show that the episodes of export growth accelerations are not new. India’s exports are characterized by a high rate of volatility making the growth path episodic with discrete shifts from periods of low growth to periods of high growth and vice versa. The switch between highs and lows is accompanied by dramatic changes in growth rates
India’s exports benefited majorly from the surge in global growth after two years of repressed demand owing to the pandemic. Several PLI schemes in diverse sectors, such as mobile manufacturing, electronic and textile products, automobile, and auto components have boosted domestic manufacturing and exports by helping India gain competitiveness in the global markets. Though these incentives take a few years to show their full effect, early signs of their positive impact are already visible.
Source: Ministry of Commerce and Industry
Major sector-wise exports of India include:
- Engineering Goods: It registered exports at US$ 7.8 billion. This is primarily due to the benefits that the sector enjoys owing to the various trade agreements India has with other countries. Currently, all pumps, tools, carbides, air compressors, engines, and generators manufacturing MNC companies in India are trading at all-time highs with increased prospects of shifting production to India. It is expected to continue its upward trajectory in steel, auto components, and medical devices and India’s push for Make in India.
- Petroleum Products: Petroleum products have contributed in a major way to Indian export growth. They registered a growth of US$ 6.1 billion. Factors leading to the growth are rising crude oil prices which got aggravated by the post-pandemic world, demand spiking for oil, and the recent geopolitical tension.
- Gems and Jewellery: Gems and jewellery made up US$ 3.6 billion of India’s exports. This sector was one of the key focus areas of Indian exports and is expected to flourish more with the reduction of import duty on cut and polished diamonds and the Extension of the Emergency Credit Line Guarantee Scheme (ECLGS) for MSMEs, which make up 90% of the sector. The largest exports of gems and jewellery from India are to the United States of America (USA), United Arab Emirates (UAE) followed by the United Kingdom (UK), Germany, Singapore, the Netherlands, and many more.
- Agriculture Exports: Agricultural exports were elated by the government’s push to meet the global demand for food amid the pandemic. India exported rice worth US$ 0.7 billion, the highest among agricultural commodities. The rise in the export of agricultural and processed food products has been largely due to the various initiatives taken by the government through the Agricultural and Processed Food Products Export Development Authority (APEDA) such as organizing B2B exhibitions in different countries, exploring new potential markets through product specific and general marketing campaigns by the active involvement of Indian Embassies.
- Organic and Inorganic Chemicals: With strong demand from developed markets, organic and inorganic chemicals registered exports worth US$ 2.3 billion further contributing to the rise in Indian exports. The export growth of organic and inorganic chemicals has been achieved because of a surge in shipments of organic, and inorganic chemicals, agrochemicals, dyes, dye intermediates, and specialty chemicals. China is a major importer of dyes, dye intermediates, and organic chemicals from India. The USA remained the largest importer of essential oils, and inorganic chemicals while Brazil was the top importer of agrochemicals from India.
- Electronic Goods: Electronic goods have also contributed massively to the export surge from India. The exports of electronic goods amounted to US$ 1.9 billion. The segment benefitted from several PLI schemes, such as the Scheme for Large Scale Electronics Manufacturing and the Scheme for the Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS). As per the Union Budget economy survey of 2019-20 the integration of ‘Assemble in India for the World’ into ‘Make in India’, India can raise its export market share to about 3.5% by 2025 and 6% by 2030.
- Textile and Apparel: India is among the top garment manufacturing countries in the world. India’s textile exports amounted to US$ 1 billion in September 2022. The government introduced various schemes such as the Scheme for Integrated Textile Parks (SITP), Technology Upgradation Fund Scheme (TUFS), and Mega Integrated Textile Region and Apparel (MITRA) Park scheme. In addition, Amazon India signed an MoU with the Manipur Handloom & Handicrafts Development Corporation Limited (MHHDCL). The sustainable Textiles for Sustainable Development (SusTex) project by the United Nations Climate Change will increase artisans’ engagement from Asia and especially India in the coming decade.
- Drugs and Pharmaceuticals: India’s drugs and pharmaceuticals export amounted to US$ 2.1 billion, and it is the largest provider of generic medicines globally. Currently, the country has a share of 20% in the global supply volume and contributes to around 60% of the global vaccines. The USA, the UK, and Russia are among the largest importers from India with a share of 29%, 3%, and 2.4%, respectively during 2021-22. The Strengthening of Pharmaceutical Industry (SPI) scheme focuses on bolstering the existing infrastructure facility, with a total financial outlay of US$ 60 million (Rs. 500 crores).
- Marine Products: India’s exports for marine products in September 2022 amounted to US$ 0.7 billion wherein India shipped 1,369,264 MT of seafood. Frozen shrimp remained the major export item in terms of quantity and value. The overall export of frozen shrimps during 2021-22 totalled up to 728,123 MT. The USA was the largest market for imported frozen shrimp, followed by China, European Union, South East Asia, Japan, and the Middle East.
Export Promotion Scheme
Foreign Trade Policy 2015-20 and other schemes provide promotional measures to boost India’s exports with the objective to offset infrastructural inefficiencies and associated costs involved to provide exporters a level playing field. Brief of these measures are as under:
1.1 Exports from India Scheme
i. Merchandise Exports from India Scheme (MEIS)
Under this scheme, exports of notified goods/ products to notified markets as listed in Appendix 3B of Handbook of Procedures, are granted freely transferable duty credit scrips on realized FOB value of exports in free foreign exchange at specified rate. Such duty credit scrips can be used for payment of basic custom duties for import of inputs or goods.
Exports of notified goods of FOB value upto Rs 5,00,000 per consignment, through courier or foreign post office using e-commerce shall be entitled for MEIS benefit. List of eligible category under MEIS if exported through using e-commerce platform is available in Appendix 3C.
MEIS has since been withdrawn w.e.f. 1st January, 2021. A new Scheme called Remission of Duties and Taxes on Exported Products (RoDTEP) has been introduced which shall refund the embedded duties suffered in export goods.
ii. Service Exports from India Scheme (SEIS)
Service providers of notified services as per Appendix 3D are eligible for freely transferable duty credit scrip @ 5% of net foreign exchange earned.
2. Duty Exemption & Remission Schemes
These schemes enable duty free import of inputs for export production with export obligation. These scheme consists of:-
2.1 Advance Authorization Scheme
Under this scheme, duty free import of inputs are allowed, that are physically incorporated in the export product (after making normal allowance for wastage) with minimum 15% value addition. Advance Authorization (AA) is issued for inputs in relation to resultant products as per SION or on the basis of self declaration, as per procedures of FTP. AA normally have a validity period of 12 months for the purpose of making imports and a period of 18 months for fulfillment of Export Obligation (EO) from the date of issue. AA is issued either to a manufacturer exporter or merchant exporter tied to a supporting manufacturer(s).
2.2 Advance Authorization for annual requirement
Exporters having past export performance (in at least preceding two financial years) shall be entitled for Advance Authorization for Annual requirement. This shall only be issued for items having SION.
2.3 Duty Free Import Authorization (DFIA) Scheme
DFIA is issued to allow duty free import of inputs, with a minimum value addition requirement of 20%. DFIA shall be exempted only from the payment of basic customs duty. DFIA shall be issued on post export basis for products for which SION has been notified. Separate schemes exist for gems and jewellery sector for which FTP may be referred.
2.4 Duty Drawback of Customs
The scheme is administered by Department of Revenue. Under this scheme products made out of duty paid inputs are first exported and thereafter refund of duty is claimed in two ways:
i) All Industry Rates : As per Schedule
ii) Brand Rate : As per application on the basis of data/documents
2.5 Interest Equalisation Scheme (IES)
The Government announced the Interest Equalisation Scheme @ 3% per annum for Pre and Post Shipment Rupee Export Credit with effect from 1st April, 2015 for 5 years available to all exports under 416 tariff lines [at ITC (HS) code of 4 digit] and exports made by Micro, Small & Medium Enterprises (MSMEs) across all ITC(HS) codes. With effect from November 2, 2018, the rate of Interest Equalisation for MSME has been increased to 5%. The Scheme has also been extended to Merchant Exporters who will now avail the benefit @ 3% for all exports under 416 tariff lines w.e.f. January 2, 2019.
3. EPCG SCHEME
3.1 Zero duty EPCG scheme
Under this scheme import of capital goods at zero custom duty is allowed for producing quality goods and services to enhance India’s export competitiveness. Import under EPCG shall be subject to export obligation equivalent to six times of duty saved in six years. Scheme also allows indigenous sourcing of capital goods with 25% less export obligation.
3.2 Post Export EPCG Duty Credit Scrip Scheme
A Post Export EPCG Duty Credit Scrip Scheme shall be available for exporters who intend to import capital goods on full payment of applicable duty in cash.
4. EOU/EHTP/STP & BTP SCHEMES
Units undertaking to export their entire production of goods and services may be set up under this scheme for import/ procurement domestically without payment of duties. For details of the scheme and benefits available therein FTP may be required.
5. OTHER SCHEMES
5.1 Towns of Export Excellence (TEE)
Selected towns producing goods of Rs. 750 crores or more are notified as TEE on potential for growth in exports and provide financial assistance under MAI Scheme to recognized Associations.
5.2 Market Access Initiative (MAI) Scheme
Under the Scheme, financial assistance is provided for export promotion activities on focus country, focus product basis to EPCs, Industry & Trade Associations, etc. The activities are like market studies/surveys, setting up showroom/warehouse, participation in international trade fairs, publicity campaigns, brand promotion, reimbursement of registration charges for pharmaceuticals, testing charges for engineering products abroad, etc.
5.3 Status Holder Scheme
Upon achieving prescribed export performance, status recognition as one star Export House, two Star Export House, three star export house, four star export house and five star export house is accorded to the eligible applicants as per their export performance. Such Status Holders are eligible for various non-fiscal privileges as prescribed in the Foreign Trade Policy.
In addition to the above schemes, facilities like 24X7 customs clearance, single window in customs, self-assessment of customs duty, prior filing facility of shipping bills etc are available to facilitate exports.
5.4 Gold Card Scheme
The Gold Card Scheme was introduced by the RBI in the year 2004. The Scheme provides for a credit limit for three years, automatic renewal of credit limit, additional 20% limit to meet sudden need of exports on account of additional orders, priority in PCFC, lower charge schedule and fee structure in respect of services provided by Banks, relaxed norms for security and collateral etc,. A Gold Card under the Scheme may be issued to all eligible exporters including those in the small and medium sectors who satisfy the pre-requisite conditions laid by individual Banks.
Apart from the above points, Government has recently unveiled new Trade Policy, link to which has been provided below:
