New product mix along with focus on emerging market opportunities are required to sustain export growth, India Ratings and Research (Ind-Ra) said on Thursday.
Accordingly, the Indian export basket in 1HFY22 consisted of a healthy mix of both labour-intensive and high-value manufactured items.
However, the ratings agency said that it will not be easy to maintain the current export growth momentum, as the stimulus-induced demand in developed economies might normalise in 2022.
"Also, the political backlash against globalisation, which became pronounced 2012-2013 onwards, but has taken a backseat lately due to the C19 pandemic, may resurface."
Besides, it said that a mix of policy support and a carefully crafted strategy which continuously explores the emerging opportunities of exports of manufactured products in developed and emerging markets can be a way forward.
"As the population in developed markets is aging, they need a different mix of goods and services than hitherto produced and exported by emerging economies to developed economies.
"Therefore, the way forward for India's exports is to not only complement the existing export basket with a new product mix but also focus more on emerging market opportunities."
India's merchandise exports grew at 58 per cent YoY in 1HFY22.
Similarly, just like exports, even imports staged a smart recovery in 1HFY22 and grew at 85.8 per cent.
"Ind-Ra expects the trade deficit to come in at $183.9 billion in FY22, which is 6.2 per cent of GDP."
"Although much higher than FY21, it is in line with the trade deficit witnessed during FY15-FY20 which ranged between 4.9 per cent to 6.8 per cent of GDP."