It won’t be surprising if India’s exports go down in the coming quarter as they have in the last 10 quarters. In the April-September quarter exports fell 24.3 per cent to $21.8 billion while imports dropped 25.4 per cent to $32.3 billion, widening the current account deficit. There is further trouble ahead with the Trans-Pacific Partnership (TPP) agreement concluded last week between 12 countries, led by the US. The TPP is likely to dent India’s labour-intensive textile exports, which have already seen an alarming drop. Vietnam, a big textile exporter, is a TPP member and will enjoy a huge advantage over India. India exports textiles worth $11.5 billion to the US, Japan and Canada, and this will take a hit. The US is the key destination and its import duties range between 15 and 50 per cent.
Additionally, recovery from the global economic crisis has been very slow despite hefty stimulus packages by the US, the UK, Europe and Japan and China. As RBI governor Raghuram Rajan said, the only answer since stimulus has failed is structural reforms, which are up-front and painful, not to mention politically risky. Carrying out this will be a slow process. So India will have to live with dwindling exports for some more time because, except for drugs and pharmaceuticals, exports of other items, like petroleum products, gems and jewellery and engineering products, have all shown steep drops. Perhaps diversifying to Latin American and African countries is a solution, though some countries, like Brazil, are also in the dumps.
