ON March 28, addressing the Asspcham annual session, Commerce and Industry Minister Piyush Goyal said that India’s overall exports have crossed $750 billion. “We’ve had a record run of FDI over the last decade with an alltime high every year until March 2022. Exports at about $500 billion in 2021 saw a phenomenal 35 per cent jump to $676 billion last year. Today, we have crossed $750 billion in exports with growth in both goods and services exported. I am sure we can achieve $2 trillion – a trillion each in goods and services respectively,” an ecstatic Goyal waxed eloquent at the Assocham jamboree.
For the record, it may be mentioned that in 2021-22, the country’s goods and services exports touched an all-time high of $422 billion and $254 billion respectively, taking the total shipments to $676 billion.
Goods segment growth
What is gratifying about the record exports is that it is not just focused on IT or value-added services but has seen growth in the merchandise or goods segment. Goyal said there has been healthy growth in both the merchandise. The minister was right in surmising that given the worldwide slowing down of the economy (particularly Europe and North America in recession), inflation reaching for the skies in most of the developed world, and interest rates spiking up “India’s performance fills us with pride”. It is something that the IMF and the World Bank have both alluded to earlier calling India the one bright spot amongst world economies.
Interestingly, service exports are not just IT-driven but value-added initiatives like consulting and R&D. But RBI data shows that IT services still accounted for close to 45 per cent of India’s total services exports in April-December. The one sector that grew the fastest was professional and management consulting – at almost 30 per cent compounded annual growth rate over the last three years according to leading security and market analysts. So what has helped in this fantastic growth?
Capability centres
Primarily this has been driven by global capability centres or high-quality backend offices that are offering clients top-notch services and solutions for areas like healthcare, accounting and the legal business. This accelerated growth will also be a huge shield to our overall exports helping cover up for any drop in the goods sector because of the weakening global economy.
Media reports quoted Sangeeta Gupta, chief strategy officer at software industry lobby group Nasscom, as estimating ‘’India is home to over 45 per cent of such global capability centres in the world.’’ The Economic Times quoting Pranjul Bhandari, chief India economist at HSBC Securities and Capital Markets, said: ‘’Such centres started off providing support functions, but they have now moved up the ladder to tech enablement, business operations, capability development, and even R&D and business development.’’ Nasscom says that the first movers were from North America, especially America followed by Europe, Asia Pacific and South Asia. ET quoting Sangeeta Gupta said: “An acceleration in digitalisation after the Covid crisis and a lack of adequate tech talent in some of these countries are key factor.”’
Not the trodden path
Piyush Goyal is right when he says that India has to look away from the trodden path if it has to vault to fulfilling its 2 billion exports target by 2030. As he said, “Renewable energy is an area where India is becoming a global leader and as we move up the value chain, if we can get into hydrogen and then green ammonia in India, we can not only change our source of energy in India but we can do that for the rest of the world and offer goods and services produced with the least amount of carbon impact making us even more attractive.”
This combined with ambitious projects like the National Infrastructure Pipeline, PM Gati Shakti, Unified Logistics Interface Platform and, of course, the ubiquitous India stack are all elements that help act as catalytic agents in helping to achieve the lofty heights of export targets set by the Government.
“Out of $32 trillion international trade, our share is minuscule therefore the delta of possibilities is huge. The kind of new ideas and new products that India has developed in the last few years, and our handling of Covid are all reflective of the new spirit that Bharat has. Our ranking in the global innovation index has now improved to 40th rank, ease-of-doing business ranking has improved to 63rd by 2019,” Goyal said. For India to achieve all this, it will have to set a template that embraces minimum bureaucracy and maximum efficiency combined with a non-negotiable focus on ESG (Environmental, Sustainability, Governance) commitments.
