India exported $250 billion in services during the 2021-22 financial year in what is a record in value, commerce minister Piyush Goyal said on Wednesday, adding that the total value of goods and services export in the last fiscal is set to surpass $650 billion.
Goyal, who announced record $400 billion merchandise exports in 2021-22 about a fortnight ago on the basis of provisional data, raised the figure to over $419.5 billion on Wednesday and said a final figure for both goods and services exports may cross $650 billion mark.
The country's mercantile trade deficit has, however, increased by 55% during the period because of high prices of crude oil, metals and other inputs, in addition to inventory building by the domestic industry to pre-empt supply-chain disruptions due to the Ukraine war.
According to official data, India's merchandise trade deficit in March was $18.5 billion, while exports jumped by about 20% to $42.22 billion and imports increased 24% to $60.74 billion. While India's total exports in 2021-22 increased to record $419.65 billion, imports jumped to $611.89 billion, leaving a deficit of $192.24 billion.
Federation of Indian Export Organisations (FIEO) director general & CEO Ajay Sahai said that the rise in trade deficit is "not worrisome" as it is "roughly 6.2% of the GDP, which is also expanding and we had managed much higher deficit, of $192 billion in past".
He said the industry is building inventory to avert any supply chain crisis. "High prices of crude and metals have also impacted trade deficit. I'm hopeful that the deficit will fall after supply situation improves," he said.
The minister said the government would set new export targets for 2022-23 soon. Exports for both – goods and services – surpassed targets set by Prime Minister Narendra Modi because the government set ambitious but practical goals through sector-wise approach and with intense consultations with all stakeholders, he said. "Instead of top down, we have bottoms up approach," he said adding that the Modi government sets targets after consulting the industry, Indian missions and export promotion councils.
The target for services exports in 2021-22 was initially $225 billion, which was later raised to $240 billion, he said. The last record was $213 billion in 2019-20, he added.
Services exports in 2020-21 was severely hit because of Covid-19 pandemic, coming to around $195 billion. Goyal said the government will soon start consultations with stakeholders to fix exports targets for the current financial year. "From Friday, I am starting round of talks with export promotion councils," he added.
The minister said record services exports could be achieved because "our services sector is moving up in value chain from low-cost services" with significant contributions of professionals such as management consultants, accountants, company secretaries, engineers and architects.
Goyal said while the Ukraine war has disrupted the global value chain that is affecting all countries, its direct impact on India is minimal. "Our total trade with Ukraine and Russia is not very large," he said.