On March 31, 2023, the Central government announced a significant change in India’s foreign trade policy (FTP) regime. Beginning FY24, the practice of having an FTP that is valid for a five year term came to an end. Instead, a dynamic, open ended FTP was put in place to accommodate the fast changing trends in global trade.

As the calendar year comes to a close, uncertainties continue to impact global trade, proving that the government’s assessment was correct – unpredictability is the norm. And nine months is too short a time to see that the measures envisaged under the new FTP can make any difference. Global merchandise trade growth has been slowing. The merchandise and services trade pattern of India, more or less, mirrors the global trend.

The World Trade Organisation (WTO) in its most recent Global Trade Outlook notes the continued slump in goods trade that began in the fourth quarter of 2022 and scales back their trade projections for the current year while maintaining a more positive outlook for 2024. WTO estimates the volume of world merchandise trade to grow by 0.8% in 2023, down from the 1.7% forecast in April.

Meanwhile, India’s overall exports (Merchandise and Services combined) in April-November 2023 are estimated to be $499.46 billion, exhibiting a negative growth of (-) 1.39% over April-November 2022 in value terms. Overall imports in April-November 2023 are estimated to be $560.9 billion, a negative growth of (-) 7.58% over April-November 2022. The most optimistic projection now is that in 2023-24, India may manage to get close to what the country had achieved the previous year - $770.18 billion worth of exports in 2022-23.


The United Nations Conference on Trade and Development (UNCTAD) gives a crisp snapshot of the performance of the global trade in 2023. The global trade in goods may decline by nearly $2 trillion in 2023, but trade in services will expand by $500 billion, the agency estimates. It says that exports from developing countries underperformed, South-South trade sharply decreased, and East Asia trade remained below average during the year. The third observation, made by UNCTAD in December 2023 is that geopolitical trends, including declining interdependence between China and the United States, are having a growing impact on global trade. All three points resonates with India’s performance during the first nine months of FY24. The country’s goods exports have been slowing down every month in value except in October, where on a month-on-month basis, the value of exports was higher than the same month, the previous year. On the other hand, services exports, except for a marginal blip in August, has been growing month on month so far this fiscal. The China+1 strategy of transnational corporations, especially the ones based out of the US is an opportunity India is trying to tap to increase its exports to the US.

UNCTAD’s analysis of trade trends in nine major economies including India puts it more clearly. According to UNCTAD, India’s goods exports declined 7% in Q3 2023, while China estimates a 6% fall. In services exports, India will be the second highest growing country, a 20% growth over the previous year, much higher than 11% of US, 5% of EU and 11% of Japan. Services exports from China dipped 10% during Q2 2023.

Russia-Ukraine war along with tensions in West Asia has increased the sense of scepticism and nervousness among the businesses and markets across the world, and India is not an exception. “While goods exports have shown minor decline in November, services continued with its growth momentum and maintained the rising trend, helping to narrow the trade deficit”, A Sakthivel, president, Federation of Indian Export Organisations (FIEO) says. India may be comparatively better as almost all countries exports are exhibiting a declining trend, many witnessing a double digit dip, he points out.

The healthy growth in services exports – a 5.93 % growth during April-November 2023 over April-November2022 – and the bigger decline in imports as compared to decline in exports during the period has helped India lower its trade deficit considerably. Overall trade deficit for April-November 2023 is estimated at $61.44 billion as compared to the deficit of $100.38 billion during April-November 2022, registering a decline of (-) 38.79%. The merchandise trade deficit during April-November 2023 is $166.35 billion compared to $189.21 billion during April-November 2022, registering a decline of (-) 12.08%.

A closer look would indicate that for April-November 2023, under merchandise exports, 14 of the 30 key sectors exhibited positive growth as compared to April-November 2022. Iron ore exports increased 203.93% in value, oil meals 34.33% and electronic goods 23.56%. The production linked incentive (PLI) scheme for electronic goods seems to have worked well as mobile phone exports, leading with iPhone exports, was the highlight of the year. Ceramic products & glassware (20.9%), fruits & vegetables (15.1%), drugs & pharmaceuticals (8.05%), meat, dairy & poultry products (6.31%), cereal preparations & miscellaneous processed Items (6.27%), coffee (4.72%), spices (3.34%), etc. were also in the growth territory.

Under merchandise imports, 16 of the 30 key sectors exhibited negative growth in April-November 2023 as compared to the same period, the previous year. These include cotton raw & waste (-63.97%), silver (-53.8%), fertilisers, crude & manufactured (-36.34%), coal, coke & briquettes, etc. (-30.6%), pearls, precious & semi-precious stones (-27.59%), vegetable oil (-26.26%), organic & inorganic chemicals (-21.6%), petroleum, crude & products (-18.41%), etc.


Immediate future also holds a lot of challenges, though the coming year could be better than the one that is getting over. As UNCAD notes, substantial disparities persist among countries and regions in terms of anticipated economic outlooks for 2024 and such disparities will influence patterns of trade. “Economic activity is being hindered by persistently high interest rates in several economies. The latest Purchasing Managers’ Index (PMI) readings for China and the United States suggest a subdued outlook for industrial output in the coming months. Regional conflicts and persistent geopolitical tensions are likely to add further uncertainty to commodity markets“, states UNCTAD’s Global Trade Update. It also notes that the increasing importance of securing critical minerals for the energy transition is expected to affect prices and further contribute to market volatility in these commodities. “Global trade is being influenced by the way supply chains respond to shifts in trade policy and geopolitical tensions, with notable impacts observed in supply linkages between China and the United States. Companies from other regions, particularly in East Asian economies and Mexico, have had opportunities to become more integrated into the supply chains affected by geopolitical concerns”, states UNCTAD.

WTO estimates global trade growth to pick up to 3.3% in 2024. “Positive export and import volume growth should resume in 2024 in all regions except for the CIS, where imports are expected to decline after a strong rebound in 2023. If the forecast for 2024 is realised, Asia would be the fastest growing region on both the export and import sides”, WTO economists say.

For India, 2024 will be the time to test the effectiveness of its new foreign trade policy (FTP) which talks of export promotion through collaboration between exporters, State governments, districts, Indian Missions etc. Some of the key pillars of FTP 2023 are also aimed at improving the ease of doing business, reduce transaction costs and undertake export friendly e-initiatives. It talks of providing extra focus to emerging areas through E-commerce and development of districts as export hubs. The FTP 2023 also encourages recognition of new towns through “Towns of Export Excellence Scheme” and exporters through “Status Holder Scheme”. It is facilitating exports by streamlining the popular Advance Authorization and EPCG schemes. Another objective of FTP is to develop India into a merchanting trade hub, where shipment of goods from one foreign country to another foreign country without touching Indian ports, involving an Indian intermediary, will be permitted. In addition to these policy measures, the government may also relook at some of the current export restrictions it has put on certain commodities like sugar, wheat and rice.

FIEO’s Shaktivel says that the need of the hour is to provide much needed momentum to exports sector through easy & low cost of credit, marketing support besides Interest Equalization to the all sectors of export. “ECLGS extension till March 31, 2024 along with conclusion of key FTAs with UK, Oman and EU must see the light of the day soon. A strategy should be chalked out for promotion of all the labour-intensive sectors of exports in consultation with the key stakeholders of the trade”, he said.

FTP seeks to take India's exports to $2 trillion by 2030. That's what Commerce Minister Piyush Goel stated when he announced the policy on March 31, 2023. The upcoming year will test the resilience of India’s trade ecosystem.

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