The goods exports in the financial year 2018-19 showed an all time high of US$ 331 billion (from the previous best of US$ 314.4 billion recorded in 2013-14) with a growth of 9.06 percent as against last fiscal. The export performance is all the more remarkable as it was recorded when global growth is moderating. The major growth drivers were electronic goods, plastics & linoleum, petroleum, engineering goods, organic & inorganic chemicals, drugs & pharmaceuticals and cotton yarn/fabs/ made-ups, handloom products. Such a remarkable export performance should be dedicated to the hard work put in by the exporting community, leading to an impressive growth despite major challenges including protectionism, tough global conditions and constraints on the domestic front. This healthy growth in exports have come at a time even when the World Trade Organization has downwardly revised the global trade forecast to 2.6% in 2019 from 3% in 2018 and global trade contracted in the first quarter of 2019. While economies across Asia especially China and Southeast Asian nations have been showing signs of sluggishness with contraction in manufacturing due to slowdown in the global trade and fragile world economy, almost all value-added product segments of exports have shown impressive growth. However, to sustain exports in difficult times, the immediate support including augmenting the flow of credit, higher tax deduction for R&D, outright exemption from GST, interest equalization support to agri exports, benefits on sales to foreign tourists and exemption from IGST under Advance Authorization Scheme with retrospective effect is need of the hour.
The rising trade deficit of 13% in the year 2018-19 over the corresponding year is the main cause of concern of the Government. The widening of trade deficit is mainly on account of swelling of crude imports bill with northward movement of prices. The Government is very keen to increase manufacturing so that the dependency on import can be reduced and widening of trade deficit could be managed. Imports substitution should be an integral part of our Foreign Trade Policy.
The main challenge facing the export sector is the liquidity which has accentuated as the flow of credit to the export sector declined substantially. Moreover, exporters’ money is also blocked in the GST refund which compounded the problem. The RBI data for the month of August, 2018 shows a decline of over 50% in export credit as compared to the corresponding month in 2017. MSME exporters are the worst sufferer and the lack of credit equally affects our export performance. There is need for increasing the flow of credit to export sector by online filing, processing and monitoring of export credit.