India’s Exports in H1 2023-24: Unpacking the Numbers & Looking Ahead

On a global scale, the World Bank’s projections for 2023 indicate a significant economic slowdown, with consequent impact on international trade. This deceleration is primarily attributed to ongoing efforts to combat high inflation through monetary policy tightening.

While a modest recovery is expected for 2024, it’s important to note that tight global financial conditions and subdued external demand are anticipated to exert pressure on emerging markets and developing economies (EMDEs). WTO has scaled back trade growth projections to 0.8% for 2023 given the continued slump.

IBT examined trends in Indian exports in context of global economic conditions for the first half of FY 2022-23, future projections and potential challenges for policymakers as well as industry.

Indian Exports

Image Source: TPCI

According to the World Bank’s global outlook, the global economy, which expanded by 3.1% last year, is anticipated to experience a significant slowdown in 2023, with a growth rate of 2.1%. This deceleration is attributed to ongoing monetary policy tightening aimed at curbing high inflation. However, a modest recovery is projected for 2024, with global growth reaching 2.4%. Nevertheless, tight global financial conditions and subdued external demand are expected to exert pressure on emerging markets and developing economies (EMDEs).

The outlook for global growth could be even weaker than expected in the event of more widespread banking sector stress or if persistent inflation pressures lead to tighter-than-anticipated monetary policy. These challenging growth prospects and heightened risks in the short term compound a longer-term slowdown in potential growth. This decline has been exacerbated by multiple shocks, including the COVID-19 pandemic, the Russian Federation’s invasion of Ukraine, and the significant tightening of global financial conditions.

According to reports, the global economy, which is already grappling with elevated inflation, is now facing an additional geopolitical crisis in the Middle East. This crisis emerged after Hamas launched a surprise attack on Israel, leading to the latter declaring war in response.

Crude oil prices surged due to rising Middle East tensions, with Brent crude up 3.44% at $87.49 a barrel and US West Texas Intermediate crude rising 3.85% to $85.98 a barrel. Rising crude oil prices are causing concerns about global inflation. Major economies like the US, India, and China, as significant oil importers, face the risk of elevated imported inflation. 

The latest WTO Global Trade Outlook has scaled back trade projections for 2023, in light of continued slump in goods trade, while retaining a positive outlook for 2024. According to the report, “the volume of world merchandise trade is expected to grow by 0.8% this year, down from the 1.7% forecast in April, while the 3.3% growth projected for 2024 remains nearly unchanged from the previous estimate”.

India’s Trade Overview 

Within this global scenario, India’s overall exports, including both merchandise and services, experienced a negative growth during Apr-Sep, 2023, are estimated to experience a negative growth of -2.97%  compared to the same period in 2022. Similarly, the overall imports for April to September 2023 are expected to demonstrate a negative growth of -10.14% in comparison to April to September 2022.

India’s overall trade trend in H1, 2023-24

India's exports H1 2023-24_TPCI

Source: PIB, *The latest data for services sector released by RBI is for August 2023. The data for September 2023 is an estimation, which will be revised based on RBI’s subsequent release. (ii) Data for April-September 2022 and April-June 2023 has been revised on pro-rata basis using quarterly balance of payments data.

Overall Trade during April-September 2023_

Source: PIB

During the period of April-Sept 23, merchandise exports amounted to US$ 211.40 billion, declining by 8.7% YoY, during April-Sept 22. Similarly, merchandise imports for April-Sept 23 totaled US$ 326.98 billion, declining by 12.2% YoY. However, services exports continued to show growth, increasing by 5.6% YoY to US$ 164.9 billion.

Merchandise Trade during April-September 2023 (1)

Source: PIB

Interestingly, merchandise trade deficit for April-Sept 23 was estimated at US$ 115.58 billion, a decrease from the US$ 140.83 billion trade deficit recorded during April-Sept 22.

India's top 10 exported commodities_ H1, 2023-24

Source: PIB quick estimates, Growth rate in % terms

Only three of the top 10 exported commodities witnessed positive YoY growth during April to Sept 2023. The decline in exports is attributed to weakened global demand and other contributing factors. 

In the case of petroleum products, exports decreased to US$ 41.89 billion in 2023, reflecting a notable decline of 17.6%. Despite an increase in the volume of petroleum exports compared to the previous year, the amount reflected in trade data was significantly lower due to a decline in global prices, according to sources.


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Gems and Jewelry exports declined the most among the top 10 by 24.31% YoY. This is again driven by demand side dynamics, apart from challenges in sourcing diamonds, substantial duty on gold imports, and geopolitical factors, particularly the Russia-Ukraine and Israel-Hamas conflicts.

Rate of decline was also sharp in the case of Organic & Inorganic Chemicals (-15.16%); RMG of Textiles (-15.36%) and Plastic & Linoleum (-14.4%). On the other hand, the decline in Engineering Goods (-2.8%) and Rice (-2.74%) is relatively modest.  

On the positive side, the rate of increase in exports of Drugs and Pharmaceuticals (5.02%) and Cotton Yarn/Fabrics/Made-ups (1.83%) was relatively modest. Electronics Goods continued its impressive growth trend with a growth by 27.6% YoY during the period, though exports declined by 3.7% YoY in September.

Growth leaders

Top five exported commodities (by YoY growth) (1)

Source: PIB

A few categories have bucked the trend to post positive export growth during the period. They were led by Iron Ore (128.04%), Oil Meals (41.2%), Electronic Goods (27.62%), Oil Seeds (23.47%) rise, and Ceramic Products & Glassware (20.25%). 

India's Top Merchandise Export Destinations (April - September 2023) (2)

Source: PIB

In the first half of fiscal year 2023, India’s top export destinations, along with their respective percentages in parentheses, are as follows: US (18.1%), the UAE (7.3%), the Netherlands (4.5%), China (3.6%), and the UK (3.1%). Other notable destinations include Singapore, Saudi Arabia, Bangladesh, Australia, and Germany. The top 10 destinations accounted for nearly half of India’s total merchandise exports.

Destination-wise share in India's merchandise exports

Source: PIB

Segment-wise performance

In the first half of FY 2023-24, the High-Tech sector in India displayed mixed performance. Drugs & Pharmaceuticals saw a growth of 5.02%, while Engineering Goods declined by -2.82%. Organic and inorganic chemicals witnessed a decline by 15.2% YoY, whereas Electronic Goods registered impressive growth at 27.62%. On the other hand, Automobile exports declined by 17.5%, with shipments totaling 22.11 lakh units, down from 26.80 lakh units in H1 FY 2022-23; again attributed to forex issues and geopolitical stress.

From April to September 2023, Indian exports in several labor-intensive sectors witnessed growth. Noteworthy sectors that exhibited positive growth in the months of April to September 2023, indicating a significant recovery includes: Cotton Yarn/Fabs./Made-Ups (1.83%), Spices (1.35%), Fruits & Vegetables (10.67%), Cereal Preparations & Miscellaneous Processed Items (1.89%). These industries managed to overcome the challenges they faced earlier in the fiscal year and demonstrated positive growth, contributing to the overall export resurgence.

Conversely, some labour intensive sectors continued to face challenges and reported negative growth during April to September 2023: Leather & Leather Products (-12.66%), Meat, Dairy & Poultry Products (-0.31%), Carpets (-5.72%) and RMG of all Textiles (-15.36%). These sectors may require focused efforts and strategies to overcome their challenges and regain a competitive edge in the global market.

Agriculture exports saw moderate growth of 2.6% YoY during this period to reach US$ 16.1 billion, though a lot of categories witnessed decline including Other Cereals (-27.7%), Marine Products (-7.7%); Tea (-5.23%); Rice (-2.74%) and Meat, dairy & poultry products (-0.31%). Rice exports are impacted by India’s export ban on non-basmati white rice, while wheat export ban has continued since May last year.

During our interactions with industry professionals, they have identified several significant challenges impeding exports. One of the foremost issues was government-imposed restrictions on certain commodities. These restrictions had a ripple effect, impacting related exports and creating uncertainty in the market. Additionally, they pointed to continued challenges in adhering to standards and testing criteria, which added complexity and compliance burdens. They also asked for subsidies in certain sectors. The negative impact of global events, such as the Israel-Hamas war crisis, was also noted as a major factor affecting export dynamics.

Future projections

Experts project low to moderate growth in exports for fiscal 2023-24, given the global economic scenario. Aniket Dani, Director of Research at CRISIL, a market research firm, predicts that India’s overall merchandise exports are likely to experience modest year-on-year growth of 2% to 4% in fiscal year 2024, reaching approximately US$ 460 billion. This projection follows an estimated growth of 5-7% in the current fiscal year. Exports to the US and EU27, which together account for nearly one-third of total merchandise exports, are expected to contract due to an anticipated economic slowdown and inflationary conditions in these regions.

Dr Pralok Gupta, Associate Professor, Centre for WTO Studies, commented, “Until the ongoing conflict situation is resolved, export revival will remain challenging. However, it may be a good idea for the government to identify products that are used as intermediary products for our merchandise exports, but facing high tariffs. Reducing tariffs on those products may help our exports become more competitive and better priced in international markets.”

Observers also highlight that a rapid increase in global interest rates is likely to impact key sectors, potentially affecting exports in the near term. Indian exports may continue to face challenging times, with the possibility of stagnation or negative growth, given the unfavorable global demand conditions and slowdown in two major export destinations, the EU and the US.

A major caveat on the way is rise in trade protectionist measures by these destinations. A report by GTRI reveals, “In the first seven months of 2023 alone, the EU has introduced five regulations on climate change and trade, each of these are essentially measures to curb imports. In absence of a functioning Appellate body, WTO cannot deliberate on these issues in decisive manner. This will hurt global trade.” In such a scenario, the report points out that India should continue to focus on increasing product quality and supply chain competitiveness. Morevoer, it asserts that India should not surrender its policy space on bilateral and multilateral forums, and look to secure mutually favourable provisions in FTAs.

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