New Delhi [India], Jan 29 (ANI): The Economic Survey 2017-18 stated that India's services sector registered an export growth of 5.7 per cent in 2016-17. During the period April-September 2017-18, growth in services exports and services imports were a robust 16.2 per cent and 17.4 per cent respectively.
Meanwhile, net services receipts rose by 14.6 per cent during this period, which financed about 49 per cent of India's merchandise deficit in H1 of 2017-18.
To boost services exports, the survey mentioned that the government in its mid-term Review of Foreign Trade Policy 2015-2020, increased incentives under Services Exports from India Schemes (SEIS) by 2 per cent, leading to an additional annual incentive of Rs.1,140 crore which could help services exports including hotel, restaurant, hospital, and educational services.
Although world trade volume of goods and services is projected to accelerate in 2018, enhanced global uncertainty, protectionism and stricter migration rules would be key factors in shaping India's services exports.
Two important developments on the trade policy front during the year relate to the mid-term review of Foreign Trade Policy (FTP) and the recent multilateral negotiations of WTO in December 2017. Besides these, there were some developments on the trade logistics front and anti dumping measures.
In the mid-term review of FTP released on December 5 last year, some additional measures were taken to help India's trade sector. Besides, a special package for employment generation in the leather and footwear sector was approved by the government subsequently, which is likely to help exports from this sector.
The survey said India's foreign exchange reserves reached USD 409.4 billion on end-December 2017. Foreign exchange reserves grew by 14.1 percent on a y-o-y basis from end December 2016 (USD 358.9 billion) to end December 2017 (USD 409.4 billion) and it grew by 10.7 percent from end- March, 2017 (USD 370.0 billion) to end December 2017. Foreign exchange reserves increased further to USD 413.8 billion on January 12, 2018.
The import cover of India's foreign exchange reserves was 11.1 months at end-September 2017 as compared with 11.3 months at end -March 2017. Within the major economies running current account deficit, India is among the largest foreign exchange reserve holders and sixth largest among all countries of the world, the survey said.
India's balance of payments situation, which has been benign and comfortable since 2013-14, continued to be so in the first half of 2017-18, despite some rise in the Current Account Deficit (CAD) in the first quarter, with a relatively lower CAD in the second quarter.
India's CAD stood at USD 7.2 billion (1.2 percent of GDP) in Q2 of 2017-18, narrowing sharply from USD 15.0 billion (2.5 percent of GDP) in the preceding quarter.
Furthermore, India's trade deficit (on custom basis) which had registered continuous decline since 2014-15, widened to USD 74.5 billion in HI of 2017-18 from USD 43.4 billion in HI of 2016-17. India's trade deficit was USD 108.5 billion in 2016-17, with reduction in both POL deficit and non- POL deficit. In 2017-18 (April-December) trade deficit (on custom basis) shot up by 46.4 percent to USD 114.9 billion with POL deficit growing by 27.4 percent and non-POL deficit by 65.0 per cent.
Also, export growth in 2016-17 was fairly broad based with positive growth in major categories except textiles and allied products and leather and leather manufactures. In 2017-18 (April-November) among the major sectors, there was good export growth in engineering goods and petroleum crude and products, moderate growth in chemicals and related products, and textiles and allied products; but negative growth in gems and jewellery.
The prospects for India's external sector in this and coming year, the survey said, looked bright with world trade projected to grow at 4.2 percent and 4 percent in 2017 and 2018 respectively from 2.4 percent in2016; trade of major partner countries improving and above all India's export growth also picking up.
The downside risks, however, lie in the rise in oil prices. This could also lead to higher inflow of remittances which have started picking up. The supportive policies like GST, logistics and trade facilitation policies of the government could help further, the survey argued. (ANI)