India’s overall trade deficit multiplied by 250 per cent over the last three financial years, rising from $40.2 billion in 2016-17 to $84.45 billion in 2017-18 and further to $103.63 billion in 2018-19, minister of commerce and industry Piyush Goyal informed the Lok Sabha in a written reply today.
Goyal stated that the country’s trade deficit depended upon relative fluctuations in the imports and exports of different commodities due to the global and domestic factors such as demand and supply in domestic and international markets, currency fluctuations, cost of credit and logistics costs.
He also attributed the increasing trade deficit, in spite of positive growth of exports, to higher imports particularly of the petroleum crude and products electronic goods, iron and steel, chemicals and related products, coal, coke and briquettes, fertilisers, machinery and non- ferrous metals, which contribute to more than 70 per cent share in total imports in 2018-19.
The government’s Foreign Trade Policy 2015-20 aims at increasing India’s export of merchandise and services from $465.9 billion to approximately $900 billion by 2019-20 and raise India’s share in world exports (goods and services) from 2 per cent to 3.5 per cent. India’s share in world exports (goods and services) increased to 2.1 per cent in 2017 as per WTO estimates.
The value of India’s overall exports (merchandise and services) increased from $440 billion in the financial year 2016-17 to $498.63 billion in 2017-18 and further to $535.80 billion in 2018-19.
Overall imports into the country increased from $480.26 billion in 2016-17 to $583.08 billion in 2017-18 and further to $639.49 billion in 2018-19.as per provisional figures from the directorate general of foreign trade and Reserve Bank of India.
While the Foreign Trade Policy (FTP) 2015-20 launched on 1t April 2015, provides a framework for increasing exports of goods and services as well as generation of employment and increasing value addition in the country, the minister said, import of essential products like crude oil and other imports to meet consumer demands for those products which are not manufactured in India, essentially pushes up the country’s imports and widen trade deficit.
He said in order to boost India’s exports and minimise the impact of trade deficit, the government has taken the following steps:
- A new Logistics Division was created in the Department of Commerce to coordinate integrated development of the logistics sector;
- Undertook various measures for improving ease of doing business;
- Launched a comprehensive `agriculture export policy’ in December last year with the aim of also doubling farmers’ income by 2022;
- A new scheme called `trade infrastructure for export scheme (TIES)’ was launched in April 2017 to address export infrastructure gaps in the country;
- A new scheme called `transport and marketing assistance (TMA)’ was launched for easing the problem of higher cost of transportation for export of specified agriculture products;
- A mid-term review of the FTP 2015-20 undertaken in December 2017 decided to increase incentive rates for labour intensive MSME sectors by 2 per cent with a financial implication of Rs8,450 crore per year;
- The Niryat Bandhu Scheme was launched for outreach/trade awareness amongst new/potential exporters;
- Interest Equalization Scheme on pre and post shipment rupee export credit for labour intensive / MSME sectors has been raised from 3 per cent in 2015 to 5 per cent effective 2 November 2018; the scheme was also extended to and merchant exporters from 2 January 2019;
- A new scheme called Scheme for Rebate of State and Central Taxes and Levies (RoSCTL) covering export of garments and made-ups was notified on 7 March 2019 providing refund of duties/taxes at higher rates.
The major 25 countries with which India’s trade deficit has widened during last three years are given below: