Why India’s exports are declining?

One of the leading matter of concern for India’s macroeconomic performance is declining exports. Exports recorded $318.6 billion in 2013-14 but gradually fell to $280 billion in 2016-17 according to the Economic Survey 2017. Though export decline can be interpreted as the global slowdown and the protectionist policies followed by trade partners, a lot of other forces have also contributed to the country’s slowing exports.
Structural factors: Some structural (read long term) like low technological adaptability and absence of technology intensive foreign investment are curtailing India’s exports. The slowdown of engineering goods, poor progress in electronics are the result of such structural factors.
Undervalued currency policies adopted by competitors amidst relatively strong rupee: India’s competitors like China and several other low-income countries are keeping their currencies to retain export competitiveness. At the same time, the rupee remains a relatively strong currency during the last few quarters.
Rising anti-globalization wave: in the context of rising anti-globalization sentiments in the West, countries are adopting micro policies to limit imports. This anti-trade sentiment has emerged as an economic policy theme in recent years.
Discriminating Regional Trade Blocs: Trade is now intensively conducted through Regional Trade Blocs or FTAs where countries exchange trade benefits on mutual understanding. This has led to discrimination against countries like India which are not members of any powerful trade blocs.
Slowing world economy: Export of India depends upon income in other countries. Slow economic growth in rest of the world also reduces India’s exports.

January 6, 2018
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