Global slowdown govt to increase services exports

Global slowdown govt to increase services exports

NEW DELHI: The global slowdown has prompted the government to focus on higher services exports, which it expects will grow by around 20% to $300 billion this year. The target for goods exports is likely to be pegged at 10-12% after a 40% jump during the last financial year.

The commerce department, which has been working on the target, is keeping an eye on first quarter numbers before announcing them.

Signs of a moderation in exports were visible during May when it grew a little over 15%. With interest rates rising in the US and other parts of the world in the wake of high inflation, export demand is expected to be sluggish. This is especially so after the high growth last year, which saw the value of shipments soar to $418 billion. Besides, the ongoing Russia-Ukraine conflict is taking a toll.

The World Trade Organization (WTO) too has lowered projections for the year. In April, it lowered the projection for 2022 to 3% from its earlier forecast of 4.7%, pointing to the war currently under way in Ukraine.

Government sources said the focus is on stepping up services exports, which remain strong, especially with segments such as travel and tourism doing well in the aftermath of restrictions due to Covid being removed in most parts of the world.

On the goods side, during a slowdown, luxury and discretionary spends typically take a beating, which may reflect in the export of gems & jewellery and garments. While there was a spurt in export of wheat and some other agricultural produce in March-April, the restrictions will have some impact. But, given the low share in India's exports, they are unlikely to leave a major dent.

The government is hoping that some of the free trade agreements (FTAs) - such as the ones with UAE and Australia - provide some thrust as it seeks to put in place a more durable strategy for double-digit exports in the years ahead. While the UAE agreement is already in place, the FTA with Australia is expected to be operational later during the year, once it is endorsed by the Australian Parliament.