India is steadily becoming a strong presence in the global exports market. To get a thorough picture of our trade pattern, it is important however to examine data over an extended period rather than focusing on a single year’s figures. Over the past five years, India’s total merchandise exports have increased by 39 per cent—from about USD314 billion in FY20 to USD437 billion in FY24.1 Backed by steady economic growth, reformatory initiatives and enhanced international ties, this reflects a strong performance against global headwinds and India’s successful navigation in beating the odds.
What is India shipping? A look into the export basket
Our export basket has progressively diversified, moving towards high-value capital and skill-intensive products. Here are the commodities that saw the maximum percentage increase in total exports since FY20:
- Electronic goods increased by 151 per cent (USD29.1) since FY20 with a 7 per cent share in total FY24 exports2
- Petroleum products grew by 109 per cent (USD80.4) and has a 19 per cent share3
- Engineering goods grew by 39 per cent (USD109.2) with a total share of 25 per cent4
- Drugs and pharmaceuticals increased by 35 per cent (USD27.8) and has a 6 per cent share5
- Organic and inorganic chemicals grew by 33 per cent (USD29.3) and has a 7 per cent share6
The electronics sector, previously underperforming, has demonstrated remarkable growth in recent years, with smartphone exports growing substantially by 42 per cent in FY24.7 India is also steadily gaining expertise in the production and export of high-tech defence commodities, with total defence exports reaching all-time high figures of USD2.5 billion, up by 131 per cent since FY20.8 We are also becoming a prominent player in renewable energy—a key sunrise industry—to meet global demands. In 2023, India’s solar exports rose to USD1.8 billion, marking a y-o-y increase of 227 per cent.9
These rising shipments highlight India’s growing manufacturing prowess, particularly in emerging sectors that are in demand globally. With India’s semiconductor ecosystem gearing up for advancements, Indian-made chips are also expected to enter global markets soon. This progress is driven by the success of strategic initiatives, such as the Make in India movement and Atmanirbhar Bharat; production reforms, such as the PLI scheme; and a consistent focus on export-oriented measures.
Towards USD1 trillion exports target: A 5-step approach
While the momentum is strong, India can focus on underlying challenges and provide tailwinds to further boost exports. If India has to achieve its USD1 trillion in exports by 2030,10 it has to clock a 12.2 per cent CAGR growth.11 So how can we beat the odds and seize a bigger chunk of global trade?
1. Diversifying market presence
India can further expand its market reach. Compared to the earlier decade, this is now easier considering the country’s push to diversify the exports basket, offering ample opportunities to enter new markets. India’s continuous FTA negotiations are increasing exports. For instance, Since signing trade agreements with the UAE and Australia, Indian exports to the UAE have grown by 13.7 per cent in FY24, making UAE India’s top exporting destination, while Indian exports to Australia also saw a significant 15 per cent rise in the same fiscal.12 Moving forward, India can identify promising markets—for instance, Africa, which, according to WTO, will see imports growth by 4.4 per cent in 2024—and pursue similar trade pacts.13
2. Optimising PLI
While PLIs have contributed to Indian manufacturing, there is still room for improvement. For instance, PLI disbursements among eligible beneficiaries in FY24 stand at USD0.81 billion against the government estimate of USD1.3 billion.14 While there are PLI benefits for 14 sectors, a one-size-fits-all approach has resulted in less success, with the exception of electronics. Hence, to ensure the effectiveness of these schemes, the government can engage with industry stakeholders, who can help in identifying existing gaps and criteria concerns. According to Global Trade Research Initiative (GTRI), the government can also consider simplifying the PLI criteria, making them less stringent and easily achievable. Besides, streamlining processes and further optimising business environment can attract more active investments. The recent announcement of simplifying norms surrounding FDIs and overseas investments in the Union Budget is a welcome move.