What triggered the surge in goods exports in the month of March 2022?

True to the claims made by Piyush Goyal, India did cross the $400 billion export mark in FY22 and crossed it by a comfortable margin at $418 billion for the full fiscal year. This is the export of only merchandise goods and does not include the services, which are a separate calculation altogether. In value terms, the exports for FY22 were 40% higher than FY21. It is correct to say that this surge was largely commodity price driven, but it is still very robust.

Let me now turn to the month of March 2022. For the month, the merchandise exports stood at a record $40.38 billion. This is substantially higher than $34 billion merchandise exports witnessed in March 2021. A large part of the growth in exports was driven by higher commodity prices. This was most evident in the export value of products like petroleum products, gems & jewellery, engineering products, chemicals etc.

Total merchandise imports for FY22 came in at $610 billion, which means the overall trade comprising of exports and imports was above $1 trillion for the first time ever. However, now imports are covered less than 12 months by forex reserves. Key import items like crude, gold, coal and fertilizers have seen consistent price rise through the year. The overall merchandise trade deficit for FY22 stood at relatively high figure of over $192 billion.

There is good news too. In FY22, the export basket of India was not just about the predominance of raw materials or intermediate goods. On the contrary, there was a perceptible shift to manufactured goods. This included wide range of products like engineering goods, electronic goods, high end specialty chemicals and pharmaceutical products. There is a manufacturing story, beyond just the commodity price story.

Here are some statistics. Electronic goods witnessed 40% jump in exports in FY22, thanks to the production-linked incentive scheme (PLI). Major markets that saw an export surge in FY22 were the US, Netherlands, Singapore, Hong Kong, United Kingdom, Belgium and Germany too. However, there are risks too. Spike in commodity prices, supply chain disruptions, embargos, shortage of containers are all major risks to trade.