According to Harsha Bangari
Managing director of India Exim Bank, external factors would continue to influence India’s export performance since the global demand is still under pressure as a result of persistent geopolitical tension that affects commerce.
In May of this year, India’s exports of products decreased for the fourth consecutive month as the eurozone entered a recession amidst soaring inflation. The World Trade Organisation, however, has increased its prediction for global demand from its prior forecast of 1% in October to 1.7%.
“Exports have increased, but imports have increased more quickly. When referring to exports, the world’s demand must be considered. Bangari, who has led India Exim Bank since 2021, stated that the global demand has slowed and become more depressed.
How has muted global demand influenced India’s exports?
The month of May saw a more than 10% decline in India’s exports of products as the slowdown in China and persistently depressed demand in the West weighed on global demand. The demand for fertilisers ahead of the Kharif planting season drove an increase in imports on a sequential basis, pushing the trade imbalance to a five-month high, according to figures issued by the industry and commerce ministry last week.
The trade deficit increased to $22.12 billion in May 2023, the largest level in more than five months, as goods exports fell 10.30% to $34.98 billion from $39 billion in May 2022 and imports fell by 6.57% to $57.1 billion from $61.12 billion. Prior to this, the amount reached a peak of $23.15 billion in December 2022.
The demand for export loans has grown, according to the two senior bankers.
“Export credit demand has increased. On the commercial side, there was more demand the previous year. As a result, our business book—which represents our exposure to sovereign nations—grew more quickly than our strategy book, according to Bangari.
Export credit organisations provide domestic businesses with loans, loan guarantees, and insurance to help them reduce the risk of exporting products and services in foreign markets.
Bangari emphasised reasons for hope in India’s export prospects. She believes that the implementation of the PLI plan, especially in industries like electronics, will propel exports in the future.
India’s decision to establish free trade agreements with several partner nations and increases in the utilisation of such accords might help strengthen the nation’s economic ties with other nations.
“If we immediately talk about the trade deals we’ve signed to make it easier for us to do business with other nations, I think we’ve been a little sluggish and haven’t completely reaped the rewards. These negotiations have picked up speed over the past two to three years, and we have signed many FTAs with trading partners.
Since there is a greater understanding of how to enhance commerce between two nations through policy instruments, I believe the speed of this will go up, said Bangari.Increases in utilisation rates and the number of partner nations might help strengthen the nation’s international economic ties.
