Supply-chain focus expected in Budget

NEW DELHI: Exports will remain one of the key drivers of India’s economic growth in 2023-24 and the coming budget will encourage imports of inputs rather than finished goods, incentivise value addition in the country, nudge businesses to explore new markets, boost services exports and provide a conducive policy environment to make India part of the global supply-chain for goods and services, two officials aware of the development said.

Union finance minister Nirmala Sitharaman on Thursday heard voices of stakeholders belonging to companies in both merchandise and services exports and assured them that she would address their concerns in order to facilitate the country’s exports, the two added, requesting anonymity. Both the government and the industry are concerned about the recent fall in exports due to a slowdown in major economies because of global headwinds, they said.

India’s merchandise exports in October declined by 16.65% to $29.78 billion; , however, overall goods exports in April-October saw a 12.5% growth to $263.35. According to commerce ministry’s data released on November 15, India’s overall exports-- merchandise and services combined -- in April-October is estimated at $444.74 billion, a 19.56% yearon-year growth.

The finance ministry, in its monthly economic review for October that was released on

Thursday said: “A rapid deterioration in global growth prospects, high inflation, and worsening financial conditions have increased fears of an impending global recession. The spillovers of the global slowdown may dampen India’s exports businesses outlook; however, resilient domestic demand, a re-invigorated investment cycle along with strengthened financial system and structural reforms will provide impetus to economic growth going forward.”

The report, citing the International Monetary Fund’s (IMF) World Economic Outlook of October said: “The WEO has also projected growth in world trade volumes to slow down significantly from 4.3% in 2022 to 2.5% in 2023 while estimating that consumer price inflation will remain elevated through the rest of the year.” High inflation globally has triggered tightening of money flow and contraction of demand across the economies.

“Budget 2023-24 will be prepared while factoring in the current global headwinds and demand slowdown. However, India has emerged as a reliable, destination of “friendshoring” for many advanced economies to minimise supply chain vulnerabilities. This is favourable for the Indian economy and the budget may consider this factor into account while pushing for growth,” one of the two officials mentioned above said. Friendshoring is the business strategy of running supply chains only through countries that are close allies, so as to avoid disruptions.