Weak global demand and recession in large economies will moderately impact the Indian economy and exports in 2023 and to improve its current account, the country should aim at reducing energy import bill, economic think tank GTRI said on Tuesday.
The Global Trade Research Initiative (GTRI) said that India in 2022 will pay 40 per cent of total merchandise import bill for crude oil and coal which is about $270 billion.
“India must re-energise exploration of local oil fields and enhance production through coal mines. Any development will cut the energy import bill substantially and improve the current account,” it added.
The US efforts to shift supply chain out of China is gradually leading to restructuring of global supply chains and relocation of few large manufacturing firms, putting India in a good position to benefit from this trend, it said.
This should be done without compromising India’s strategic autonomy, it said adding that in various free trade agreements (FTAs) under negotiations, India should carefully evaluate the impact of new provisions on domestic policies.
Such provisions are used by the developed countries including the US and the EU in creating non-tariff barriers against exports from partner countries.
Talking about the outlook for 2023, it said “The Indian economy and exports will be moderately impacted by weak global demand and recession in large economies. To improve its current account, it should aim to cut energy import bill”.
On trade data, it said India’s exports are expected to touch $440-450 billion in 2022 despite the global uncertainties as against $395 billion in 2021.
India’s merchandise imports are also likely to be around $725 billion in 2022, higher than $573 billion in 2021.
“India is set to achieve the highest ever export turnover in 2022. Its total (merchandise and services) export turnover will be in the range of $740-750 billion. This calls for celebrations as the achievement comes despite gloomy conditions worldwide. Merchandise exports are expected to be in the range of $440-450 billion,” it said.
Services exports are expected to be $295-300 billion in 2022 as compared to $254 billion in 2021.
The trade data release by the commerce ministry has so far released the data till November 2022. In January-November 2022, merchandise exports crossed $405 billion.
Former Indian Trade Service officer Ajay Srivastava is the co-founder of GTRI.
He took voluntary retirement from Government of India in March 2022. He has a rich experience in trade policy making, and issues related to WTO and FTAs.