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India's Export Prospects Amidst Global Uncertainties

India's robust export performance in 2021-22, reaching a record high of USD 422 billion, may face challenges in 2023. The escalating Russia-Ukraine conflict and recessionary trends in major Western markets are expected to dampen India's outbound shipments. The World Trade Organization (WTO) has projected global trade to grow by a mere 1 percent in 2023, citing geopolitical instability and economic shocks. Furthermore, the resurgence of COVID-19 cases in countries like China, Japan, South Korea, and the US adds to the complexities.
The disruptions caused by the Russia-Ukraine war have strained global supply chains, driving up commodity prices and impacting crucial trade routes. The WTO anticipates a slowdown in global trade momentum in 2023 due to these multifaceted challenges.
However, India has been resilient in managing export growth, and a healthy surge in service exports, which reached USD 254 billion in 2021-22, may offset some declines in goods exports. Experts predict services exports to reach USD 300 billion this fiscal year, with recent months showing positive growth trends.
Nonetheless, India grapples with a widening trade deficit, which affects the rupee's value and the current account balance. Ballooning to USD 30 billion in July, the trade deficit has prompted a depreciation of the Indian currency, albeit partially cushioning export impacts.
Amidst global trade complexities, India's export performance remains a focus. The depreciated rupee may aid exports, especially those less reliant on costly imported raw materials. India's share in global trade is still below 2 percent, which could insulate it to some extent from global trade fluctuations. Utilizing free trade agreements and exploring new agreements with countries like the UK and Canada could boost exports. The government's measures to promote exports, including interest subsidies and schemes like RoDTEP, offer support in these uncertain times. While challenges persist, India's export growth trajectory remains cautiously optimistic, driven by strategic initiatives and resilience in the face of global uncertainties.
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