India’s Economic Resilience Amid Global Challenges

India’s external sector is demonstrating remarkable resilience despite facing significant global economic challenges. The Economic Survey 2024-25, presented in Parliament by Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman, highlights this resilience amid uncertainties in trade policies and economic conditions worldwide. The survey provides a comprehensive overview of India’s trade performance, foreign direct investment (FDI), and measures to strengthen the export sector, showcasing the country’s potential to navigate through turbulent times.
India’s Trade Performance
The Economic Survey reveals that India’s total exports, encompassing both merchandise and services, have experienced a steady growth of 6 percent in the first nine months of the financial year 2024-25. Notably, the growth in services and goods exports, excluding petroleum and gems and jewelry, reached an impressive 10.4 percent. This growth indicates that Indian manufacturing, agriculture, and services are effectively competing in the global market.
However, the survey also notes that total imports during the same period grew by 6.9 percent. This increase in imports comes amid disruptions in global trade caused by various factors, including the Red Sea crisis, the ongoing Ukraine war, and recent droughts affecting the Panama Canal. Additionally, many countries have adopted protectionist measures, leading to increased Non-Tariff Measures (NTMs) that restrict international trade. As of December 2024, Technical Barriers to Trade (TBT) impacted 31.6 percent of product lines, covering 67.1 percent of global trade. The sectors most affected by these NTMs include agriculture, manufacturing, and natural resources, highlighting the challenges faced by Indian exporters in a complex global landscape.
Free Trade Agreements and Strategic Roadmap
The Economic Survey emphasizes the need for India to develop a strategic trade roadmap that leverages its strengths in the global market. Currently, India is actively negotiating several Free Trade Agreements (FTAs) with various countries and trading blocs. For instance, the UAE-India Comprehensive Economic Partnership Agreement (CEPA), established in 2022, has significantly reduced textile tariffs, opening up a substantial market for Indian textiles.
India is also pursuing trade deals with major importers, including the European Union and the United Kingdom. The survey highlights the importance of diversifying India’s export basket and targeting new markets to enhance trade performance. By focusing on strategic partnerships and agreements, India aims to bolster its position in the global trade arena and mitigate the impact of protectionist tendencies observed in various countries.
Services Exports: A Growing Sector
India’s services exports have shown a remarkable presence in the global market, with significant contributions across various sectors. The survey indicates that India’s share in global services exports has more than doubled, reaching approximately 4.3 percent in 2023, up from 1.9 percent in 2005. Notably, in the telecommunications, computer, and information services sector, India commands a substantial 10.2 percent share, ranking as the second-largest exporter globally. This reflects India’s strong position in IT outsourcing, software development, and digital services.
The ‘Other Business Services’ sector also plays a crucial role, with India holding a 7.2 percent share, ranking third globally. This growth is driven by India’s expertise in professional and consulting services. Additionally, there are promising opportunities for growth in international tourism and global transport networks. The rise of e-commerce exports presents immense potential for significant contributions to India’s GDP, fueled by advancements in technology, online payments, localized delivery services, and data-driven customer interactions.
Measures to Strengthen Exports
To enhance the export sector, the Economic Survey outlines several measures aimed at improving logistics, infrastructure, and policy reforms. The Directorate General of Foreign Trade (DGFT) has launched the ‘Trade Connect e-Platform,’ a single-window initiative designed to help exporters access new markets. This platform aims to transform the international trade landscape for Indian exporters, particularly micro, small, and medium enterprises (MSMEs). By addressing information asymmetry, the platform provides exporters with comprehensive support, resources, and near real-time access to critical trade-related information.
Investments in logistics hubs and infrastructure development are also crucial for driving Indian exports. The survey emphasizes that these measures will enhance supply chain efficiency and enable Indian exporters to compete more effectively in the global market. By implementing these strategies, India aims to strengthen its export sector and ensure sustainable economic growth in the face of global challenges.
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