Few sectors see export growth in FY24 amid global challenges; recovery expected in FY25.
During FY24, India’s export landscape faced significant global challenges, yet certain sectors like engineering goods, electronic goods, and pharmaceuticals saw notable growth. High global interest rates and geopolitical conflicts, which drove up energy prices, affected overall trade dynamics. However, the World Trade Organization (WTO) predicts a gradual recovery in global merchandise trade, with sectors such as engineering, electronics, pharmaceuticals, and iron ore poised to drive India’s export growth in FY25.
Data from the commerce ministry revealed that engineering goods, accounting for approximately 25 percent of India’s export basket, saw a modest 2.14 percent increase in export value during FY24. Conversely, petroleum products and gems & jewellery, which hold 18.6 percent and 7.6 percent shares respectively, experienced declines of 11.8 percent and 13.83 percent. Exports of organic and inorganic chemicals, representing around 7 percent of the export basket, fell by 2.78 percent.
Notably, electronic goods and pharmaceuticals, contributing about 14 percent to India’s export basket, recorded substantial annual growth rates of 23.5 percent and 9.73 percent respectively during FY23. Despite these gains, India’s total merchandise exports decreased to $437.06 billion in FY24 from $451.07 billion in the previous fiscal, while imports dropped to $677.24 billion from $715.97 billion.
Global trade disruptions were influenced by various factors: Houthi attacks on ships in the Red Sea, the ongoing Russia-Ukraine conflict leading to expensive crude oil, heightened US-China trade tensions, and the EU’s proposed Carbon Tax and Forest regulations. These events collectively impacted freight costs and supply chains, according to a report by the Global Trade Research Initiative (GTRI).
Looking ahead, Biswajit Dhar, a professor at Jawaharlal Nehru University, anticipates continued success for sectors like electronics, mobile assembling, and pharmaceuticals. However, he expresses concern over rising protectionism in advanced economies, which could impose higher tariffs and stricter standards, potentially affecting Indian exports.
The WTO’s recent Global Trade Outlook and Statistics report projects a 2.6 percent increase in global merchandise trade volume in 2024, and a further 3.3 percent rise in 2025, as economic pressures ease.
In 2023, global trade contracted by 1.2 percent, with merchandise exports declining by 5 percent to $24.01 trillion. However, services exports grew by 9 percent to $7.54 trillion, partly offsetting the decline in goods trade. During FY24, Indian exports remained steady to major markets like North America, Europe, and the WANA region, while declining in regions such as ASEAN, South Asia, North East Asia, and Africa.
