India ranks 21st in the world for exports, with $299 billion in exports in 2018. Its top exports are mineral fuels including oil, gems and precious metals, machinery including computers, vehicles, and organic chemicals. India's exports have grown moderately in recent years, while imports have surged, leading to a widening trade deficit of $184.5 billion in 2018. The main contributors to the deficit are imports from China, Saudi Arabia, Iraq, Switzerland, and Iran. Reducing the trade deficit will require stronger export growth in key sectors like textiles and agriculture to regain competitiveness, as well as managing import growth.
2. India’s Rank in World Trade
Rank Country Exports
1 China $2,157,000,000,000
2 United States $1,576,000,000,000
3 Germany $1,401,000,000,000
4 Japan $683,300,000,000
5 South Korea $577,400,000,000
6 France $551,800,000,000
7 Netherlands $526,400,000,000
8 Italy $499,100,000,000
9 Hong Kong $496,900,000,000
10 United Kingdom $436,500,000,000
21 India $299,300,000,000
3. India’s Top Exported Commodities
MINERAL FUELS
INCLUDING OIL
US$48.3
BILLION (14.9%
OF TOTAL
EXPORTS)
GEMS,
PRECIOUS
METALS
$40.1 BILLION
(12.4%)
MACHINERY
INCLUDING
COMPUTERS:
$20.4 BILLION
(6.3%)
VEHICLES
$18.2 BILLION
(5.6%)
ORGANIC
CHEMICALS
$17.7 BILLION
(5.5%)
5. Variation in Exports
Mineral fuels including oil was the fastest growing among the top 10 export
categories, up 34.5% from 2017 to 2017. Notably, exports of Indian refined petroleum
oils and electrical energy were behind this acceleration.
Close behind in second place for improving Indian export sales was electrical
machinery and equipment which gained 33.9%.
India’s shipments of organic chemicals recorded the third-fastest gain in value up
30.7% year over year, ahead of the 22.5% sales expansion for the machinery including
computers category.
There were three declining top categories for Indian exports: iron and steel via its -
14.7% drop, clothing and accessories (down -9.6%) then gems and precious metals
(down -5.8%) mainly due to India’s plummeting international sales of gold.
6. Trade
Commodities
and Countries
In 2018, India’s most valuable exported products were
processed petroleum oils, unmounted diamonds,
medication mixes in dosage, jewellery, rice, cars,
automobile parts or accessories, crustaceans including
lobsters, cyclic hydrocarbons then predominantly cotton
yarn.
Strategically located near highly populated trading partners
including China, Pakistan and Bangladesh, the Republic of
India shipped US$323.1 billion worth of goods around the
globe in 2018. That dollar amount reflects a 1.7%
improvement since 2014 and a 9.2% gain from 2017 to
2018.
7. India’s Top
Trading Partners
About three-fifths (60.4%) of
Indian exports in 2018 were
delivered to the above 15
trade partners.
Leading the decliners were
importers in
Vietnam (down -17.4%),
Hong Kong (down -12%)
Singapore (down -9.9%)
Rank Country Export Worth
1 United States US$51.6 billion (16% of total Indian exports)
2 United Arab Emirates $29 billion (9%)
3 China $16.4 billion (5.1%)
4 Hong Kong $13.2 billion (4.1%)
5 Singapore $10.4 billion (3.2%)
6 United Kingdom $9.8 billion (3%)
7 Germany $9 billion (2.8%)
8 Bangladesh $8.8 billion (2.7%)
9 Netherlands $8.7 billion (2.7%)
10 Nepal $7.3 billion (2.3%)
11 Belgium $6.8 billion (2.1%)
12 Vietnam $6.7 billion (2.1%)
13 Malaysia $6.5 billion (2%)
14 Italy $5.5 billion (1.7%)
15 Saudi Arabia $5.5 billion (1.7%)
8.
9. Positive Changes
The Netherlands increased its import purchases from India from 2017 to 2018
by the leading 59.3%.
In second place was Nepal with a 32.2% gain in value.
China boosted its imports from India by 31.3%, trailed by a 21.4%
improvement for Bangladesh, a 17.7% uptick for Malaysia and a 12% boost
from United States-based importers.
11. Variation in Imports
India’s top 10 imports accounted for four-fifths (80%) of the overall value of its product
purchases from other countries.
Imported mineral fuels including oil had the fastest-growing increase in value among
India’s top 10 import categories, up 37% year over year. In second place for expanding
import purchases was the inorganic chemicals category via a 29.8% improvement, trailed
by the 25.6% increase for organic chemicals and the 20.1% gain for machinery including
computers.
The two declining categories for India’s imports were animal and vegetable fats, oils and
waxes (down -14.4%) and gems and precious metals (down -12.6%).
12. Trade Deficit
India incurred an overall -$184.5 billion trade deficit for all products during
2018, expanding 24.5% from its -$148.2 billion in red ink one year earlier.
It would be unrealistic for any exporting nation to expect across-the-board
positive trade balances with all its importing partners. That export country
doesn’t necessarily post a negative trade balance with each individual partner
with which it exchanges exports and imports.
13. India incurred the highest trade deficits
with the following countries:
China: -US$57.3 billion
Saudi Arabia: -$22.9 billion
Iraq: -$21.2 billion
Switzerland: -$16.8 billion
Iran: -$11.9 billion
South Korea: -$11.6 billion
Indonesia: -$11.2 billion
Australia: -$10.4 billion
Qatar: -$8.9 billion
Nigeria: -$8.4 billion
0 10 20 30 40 50 60
China
Saudi Arabia
Iraq
Switzerland
Iran
South Korea
Indonesia
Australia
Qatar
Nigeria
57.3
22.9
21.2
16.8
11.9
11.6
11.2
10.4
8.9
8.4
Trade Deficit ($ Billion)
14. Variation in Deficit
Among India’s trading partners that cause the greatest negative trade
balances, Indian deficits with Iraq (up 50.9%), Saudi Arabia (up 44.3%) and Iran
(up 40.9%) grew at the fastest pace from 2017 to 2018.
These cashflow deficiencies clearly indicate India’s competitive disadvantages
with the above countries, but also represent key opportunities for India to
develop country-specific strategies to strengthen its overall position in
international trade.
15. Reasons Behind
Much of the progress on this front was undone last year when imports surged, and export growth remained
moderate.
Reasons for this range from short-term concerns like the disruption caused by the implementation of GST,
to longer term issues like losing the competitive edge in categories like textiles and agricultural exports.
Some inexplicables, like the surge in gems and jewelry imports have also led to a widening of the trade
deficit.
The expansion in imports was nearly twice as high as export growth in 2017-18, which led to the
merchandise trade deficit widening by 44 percent.
17. Slow Export Growth
Export growth in 2017-18 was better than in the previous year but failed to capitalise on the jump
seen in global trade volumes. India’s exports grew 9.8 percent in the 12 months ended March 2018,
after a growth of 5.2 percent in the 2016-17.
And, this, is at a time when global demand has been strong. According to the World Trade
Organisation, global trade grew at its strongest pace in six years in 2017 at 4.7 percent.
Export growth remained in single digits and well below the growth seen in FY11 and FY12. It is also
worth mentioning that the Dollar value of exports remains at close to $300 billion.
Indian exports have been oscillating close to that mark since FY12 now.
18. Reducing the Deficit
As per Foreign Trade Policy 2015-20, the government aims to increase India's export of
merchandise and services from USD 465.9 billion to about USD 900 billion by 2019-20 and to
raise India's share in world exports (goods and services) from two per cent to 3.5 per cent.
To reduce the trade deficit India is relying on services export, top companies like Tata
Consultancy, Wipro, HCL and Infosys have the potential to fill the gap between imports and
exports to an extent and offer employment as well.
Apart from that, products, such as rice, food and pharmaceutical products, which could add to
the exports could help reducing the deficit.
19. Road Ahead
Boosted by the forthcoming FTP, India's exports are expected reach US$ 750 billion by 2018-
2019 according to Federation of India Export Organisation (FIEO).
Also, with the Government of India striking important deals with the governments of Japan,
Australia and China, the external sector is increasing its contribution to the economic
development of the country and growth in the global markets.
Moreover, by implementing the FTP 2014-19, by 2020, India's share in world trade is expected
to double from the present level of three per cent.