Both exports and imports had a much higher economic footprint in the third quarter (October-December) of FY22 (2021-22) than the preceding quarters, the latest government estimates have shown. While the robust nature of exports will allow policymakers to breathe easily, for now, the massive import figures need government attention, officials said.
Latest data by the National Statistics Office (NSO) on February 28 showed that India's economy grew 5.4 percent in Q3FY22. It also showed that the value of outbound trade during Q3FY22 stood at Rs 7.8 lakh crore, higher than the exports worth Rs 6.45 lakh crore during Q3FY21. But experts point out that, more importantly, they were higher than the exports worth Rs 7.06 lakh crore during Q3FY20.
This strengthens the Commerce Department's forecast that exports are firmly on the rise and the government’s ambitious $400-billion annual merchandise export target can be met in FY22, officials said.
Exports also made up 20.4 percent of India's GDP in Q3FY22, up from 17.8 percent a year back in Q3FY20. This was purely as a result of global trade demand going up and commodity prices rising, officials said.
Buoyed by strong global demand, a glut in manufactured items waiting to be shipped, and strong commodity prices, exports have been on a continuous upswing since early this year. Even without considering the base effect, they have surpassed the 2019 levels.
India attracted Foreign Direct Investment (FDI) inflows of $12.46 billion during Q3FY22, which was 78.5 percent lower as compared to the same quarter a year back. "Usually, a large part of these investments make their way into sectors which have a significant export footprint. Since the latest FDI figures are a bit slower, that hasn't happened in the latest quarter, a senior Department for Promotion of Industry and Internal Trade official said.
Imports rise rapidly
On the other hand, imports have also maintained high numbers. “Imports were more than at least nine-quarter high. Overall imports have skyrocketed since FY21 but the pace has accelerated sharply in 2022," a functionary of the Federation of Indian Export Organisations (FIEO) said.However, higher imports also signify higher consumer and industrial demand, he added.
Imports constituted Rs 10.15 lakh crore of India’s GDP in Q3FY22, up from Rs 7.65 lakh crore a year back in Q3 FY21. Quarterly imports have risen for the past five quarters now.
On the other hand, imports constituted 26.6 percent of the GDP in Q3FY22, much higher than the 21.1 percent a year back in Q3FY21. Imports had been 27 percent of GDP in Q2FY22.