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Merchandise exports from India may grow to $500-510 billion in the current financial year (FY25) after witnessing a 3 per cent contraction in the last financial year (FY24), Federation of Indian Export Organisations (FIEO), the apex body for exporters, said on Thursday.
Services exports could be worth $390-400 billion, pushing the country's total exports to around $890-910 billion, FIEO President Ashwani Kumar told reporters. This will be driven by sectors such as engineering, and advertising services, among others. Expansion of the global capability centre and their businesses are expected to further push exports. India’s total exports stood at $778 billion in FY24.
India’s traditional export markets such as the United States (US) and Europe will drive the growth. Demand for technology-driven sectors like electronics, machinery, high and medium technology, pharmaceuticals, medical and diagnostic equipment, among others, are expected to be robust.
“We will benefit by increasing incremental production under the PLI (production-linked incentive) scheme, much of which will find its way to exports. The labour-intensive sectors like apparel, footwear and gems & jewellery, which suffered a double-digit decline in 2023-24, are set to post better results,” FIEO’s vice president Israr Ahmed said, adding that with a better monsoon forecast, “we expect some of the restrictions on cereal exports may also be lifted.”
CREDIT WOES
The apex exporters’ body also said the demand for credit had gone up with rising inflation, high commodity prices and abnormal increases in sea and air freight. With the longer voyage time, on account of diversion of cargo through the Cape of Good Hope, coupled with slow offtake from the shelves, the buyers are also taking longer time to remit export proceeds, resulting in higher credit for a longer period. This requires additional flow at the most competitive rates.
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“A sub-target for exports within the overall target for the priority sector lending is required. Given a consistent decline in credit to exporters during recent times, as also the importance accorded to finance in driving export growth, the RBI may consider prescribing a sub-target for export credit within the existing 40 per cent target for priority sector lending (PSL) as has been done for MSME with 7.5 per cent sub-target, within the 40 per cent of PSL,” FIEO said.
US TARIFFS ON CHINA
The US’ move to slap new tariffs on Chinese imports will start the tariff war between the two countries as retaliation is expected from China, Kumar said, adding that this can be an opportunity for India and other competitors to chip in the supply gap.
He said since China has overcapacity in many sectors, there could be a threat of dumping of products in India.
“I am sure the industry and the government will be keeping a close watch on imports and if surge or dumping happens, DGTR will take appropriate action to safeguard our industry,” Kumar said.
