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India’s economic gloom has a silver lining — exports. In the first eight months (April-October) of the current financial year, exports have grown 16.2 per cent to $179 billion over a year. With growth picking up in developed economies, emerging markets like India have seen their exports grow. What has supported this trend is the sharp fall in the currencies of emerging markets. Textile exports, too, have shown a smart recovery from the 2008-09 lows and grown 22.7 per cent in the April-October period.
If India is exporting more to the rest of the world, it has implications for gross domestic product (GDP) growth as well. But this isn’t a blip, if export trends of emerging economies are compared. Over five years, ex-Japan Asian exports have remained flat in value terms. The countries that have seen a sharp uptick in exports are Vietnam and India.
As India is not a big commodity exporter, it should see its machinery and transportation equipment exports pick up. Also, over the years, India has built capability in telecom equipment, which should also see good demand in the coming years. Following the sharp fall in its currency, India’s export competitiveness has improved. Currently, it ranks only after China and Hong Kong in Asia.
According to Credit Suisse, incorporating recent changes in real effective exchange rates and foreign direct investment performance in existing competitiveness trends alters the country’s export ranking. “The analysis suggests India should see the largest gains in export competitiveness over the next few years, supported by its recent competitiveness trends, and real exchange rate depreciation,” analysts at Credit Suisse explain.
