The Government of India is confident about hitting the export target of 500 billion dollars in the present financial year.
India has signed two major agreements with the United Arab Emirates and Australia. These free trade agreements lay the basement for rupee-based international trade.
India – a good place for exports
India is considered to be a great place for international trade for various reasons.
Some of the major reasons are the larger economy, bigger consumer market, and excellent talent and skills that are found in India.
The major exports of India include rice, diamonds, refined petroleum, packed medicaments, etc. These products are exported to various countries.
Rupee trade allows the countries involved in trading to carry over the trade directly. And this is done without using international currencies such as euros or dollars.
It enables the Indian exporters to get paid in Indian rupees for the products they export.
Free Trade Agreement
A free trade agreement is nothing but a pact made between two countries. The agreement is made to reduce the barriers to imports and exports which are carried out between the two nations.
Free Trade Agreement enables the trading of goods and services across international borders with less or no government tariffs or subsidies.
It also eliminates the prohibitions in the exchange of goods and services.
Export Target of $500 Billion
The two free trade agreements made with the United Arab Emirates and Australia, rupee-based international trade, and various other factors ensure the export target. The various positive forecasts made by specific sectors also help reach the target.
The government is confident in achieving the export target of $500 billion despite the increasing uncertainties among the global orders. After the pandemic, exports from India increased on an annual basis.
From April to July in FY23, the exports increased by 19.35% compared to the previous year. The officials of the Indian government state that the target can be reached within the rest of the year if this rate is maintained consistently.
The Commerce Department mentioned that certain restrictions are imposed on exports. These restrictions are made on wheat, some petroleum products, iron, and steel from May onwards. This resulted in the drop out of the overall export figures.
The officials also revealed certain findings of the export promotion councils. They found that certain stocks of textiles and leather in the consumer goods space had stocked up. These stocks are remaining stagnant in the unsold inventory. The officials also mention that the existing export orders are postponed and reassure that they are not canceled.
The government has indulged in various bilateral trade deals to balance the drop in exports. An additional $10 billion and $6 billion in exports are expected in the United Arab Emirates and Australia, respectively. The expectation is based on the two major free trade agreements which are signed in this financial year.
Thus, the government is quite confident in reaching the export target of $500 billion in FY23 through the rupee-based international trade and the two FTAs signed recently.