India’s Exports Set to Surge by $100 Billion in Next Year, Says Piyush Goyal

The government launched a new foreign trade policy (FTP) on Friday that aims to boost e-commerce, internationalize the rupee, and grant amnesty to those who have fallen short of their export requirement targets under the advanced licensing and export promotion capital goods (EPCG) programs.

The government also aimed to give "merchanting" a boost, which will enable companies to buy products outside of India and export them elsewhere. The government has promised to conduct annual reviews to make sure the regime is flexible and meets the needs of businesses, unlike in the past when FTPs had a five-year sunset date.

According to Piyush Goyal, minister of trade and industry, although Indian exports may experience global headwinds, they are anticipated to remain strong over the upcoming fiscal year.

"By the end of the day, we might export goods and services worth more than $765 billion. It is difficult in these times to increase exports by roughly $100 billion (in the current fiscal year). It significantly lessens the strain on the current account balance, which frightened many. Even if exports of commodities have increased and would have increased much more if some export restrictions hadn't been in place, services have partially made up for the shortfall on the goods side,” he spoke.

Goyal stated that exporters are optimistic as the commerce department continues thorough deliberations before deciding on targets for the upcoming fiscal year. "Despite the difficulties, the atmosphere is such that they can aid in boosting exports by an additional $100 billion (next year). They have been greatly inspired by Prime Minister Narendra Modi's rallying cry (in August 2021). They have more than met the goal this year, despite the widespread belief that it was unachievable."

Due to geopolitical tensions, the unpredictability brought on by El Nino, and the government's efforts to ensure that there is more than enough stock of food grains, some of the export controls, such as those on wheat and sugar and the windfall tax on petroleum goods, maybe in force also next year. Goyal claimed that new policies like merchanting, which permits exporters to buy in nations like Italy and sell in the UAE, will increase the amount of foreign currency generated, while efforts to internationalize the rupee will reduce transaction costs, particularly for small enterprises.

"There are several foreign currency transactions for someone selling to another country, and each one entails conversion and transaction charges. It has an impact on both sides. The internationalization of the rupee will be advantageous to both parties, and we may anticipate increased exports,” added he.