International trade as a tool of growth was recognized little late by the country with concrete efforts to boost merchandise exports taking place only over last about two decades. As a result, there was a strong exports growth since about 2000, resulting in growth of almost 20% CAGR during FY00-FY12 period. Exports crossed $ 300 bn in 2011-12 from $ 37 bn in 1999-2000 as per RBI data . Exports have seen moderation over last few years as a result of global slowdown and probably, also due to overvalued rupee. Yet, it would be pertinent to look at various components of trade and their performance over last few years.
The top categories of goods in India’s export basket are Engineering goods, Gems & Jewellery, Clothing including all input material, Petroleum products and Food products. These five groups accounts for more than 70% of total exports of $ 262 bn in FY16. Of these, engineering goods has the largest share of 23% in FY16. It has recorded CAGR of 10.3% during FY10-16, the period for which data as per new set is available with RBI. The growth rate for the segment is among the best and considerably higher than 6.6% for total trade.
Gems & Jewellery forms the second group with share of 15.1%. However, its growth has been lower than the average leading to decline in its share from 17% in FY10. The category of clothing and inputs including textiles, cotton, man made yarn/ fabrics etc account for 13.3% of exports, up from 11.8% in FY10. It may also be noted that sector is exporting a significant share of goods as raw material and not after value addition. Ready made garments account for only half of the total segment exports.
The next important group is petroleum products with a share of 11% in total exports. Due to decline in prices of petroleum products, exports have come down sharply falling by as much as 46% in FY16. However, in terms of quantity, exports remain strong and an important source of foreign exchange earner.
Broad category of food products including rice, spices, fruits, vegetables, meat and marine products together account for 9.7% of total trade. The segment has grown at nearly 11% during the period increasing its share from 7.7 in FY10. However, considering the food inflation affecting the country over last few years, probably the increasing exports is a reason for worry. A more restrictive approach to food export probably would serve the needs of the economy more effectively.
It would be pertinent to mention the export performance of iron ore segment also. The segment had recorded exports of $ 6 bn in FY10 which came down to $ 0.5 bn in FY15 and $ 0.2 bn in FY16. The segment has seen huge reversal over last 7-8 years with court intervention and imposition of export ban subsequent to reports of illegal mining.
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