The decline in the country's exports for the second month in a row indicates that the situation is becoming challenging

- Strength in service exports is a savior for the country amid global economic slowdown

The decline in the country's trade deficit in January has been on the positive side of the recently released January import-export figures. Exports also declined last month. January's trade deficit was $17.75 billion, a 12-month low, compared with $23.76 billion in December. For any country, a reduction in its negative trade balance is welcome, but a reduction in its exports can be considered an equally adverse situation. Compared to January of last year, the country's exports have decreased by 6.58 percent to 32.91 billion dollars in January of the current year. Export of goods in December was 34.48 billion dollars. Exports fell for the second month in a row in January. Among the overall exports, non-petroleum product exports were down by 8.77 percent year-on-year. Exports are believed to have declined due to slowing global growth.

On the other hand, imports other than crude oil and gold have also decreased for the first time since October 2020. The country's imports fell by 3.63 percent year-on-year to 50.66 billion dollars in January. In January, 2022, the import figure was 52.57 billion dollars. The import figure for December was 58.24 billion dollars. One cannot help but wonder if the decline in imports signals a slowing recovery in the country. If there is a favorable situation on the export front of the country, it is the strength in the export growth of the service sector. Exports of services have almost equaled exports of goods. In January, services exports stood at $32.24 billion, while goods exports stood at $32.91 billion. Exports of services grew by a whopping 49 percent. India's external position remains stable due to a narrowing of the goods trade deficit, growth in services exports, and higher-than-expected growth in remittances.

In the period from April to January of the current financial year, the country's exports of goods increased by 8.51 percent to 369.25 billion dollars. In this period, the import has increased by 21.89 percent to 602.20 billion dollars. A fall in goods imports and an increase in service exports could mean the current account deficit remains lower than expected.

In view of the global recession, Finance Minister Nirmala Sitharaman has indicated a decline in the country's exports. While the slowdown abroad could prove to be a challenge for India's exporters, he also admitted that it is now imperative that India capitalize on the strength in service sector exports. Competitiveness continues to be a major constraining factor in India's service exports. India cannot compete against countries like China as a result of high expenditure on manpower. In order to increase the export of services, apart from broadening the offerings in the service sector, it is also necessary to ensure that skilled workforce is available. A trained workforce will enable India to compete competitively. Emphasis is placed on building a business presence in the nations that receive our services. So that service export growth is supported. When India is strong in IT and IT enabled services, it is necessary to make this service sector a CD and increase exports in other business services. It is necessary to identify the market for India's services abroad without depending only on the export of certain types of services and to emphasize on developing new export products and provide incentives for them.

Apart from the service sector, pharmaceuticals manufactured in India also have a strong market abroad, but recently some adverse reports have put the credibility of Indian pharmaceutical companies at stake in the export market. Reports of eye damage caused by Indian-made eye medicine and reports of children dying in Gambia and Uzbekistan due to Indian-made cough syrup have raised questions about the quality of India's medicine. In such a situation, the Indian government continued to tighten the quality control of domestically produced medicines and other products, especially agricultural products.

India's pharma sector is vast and the global size of the pharma market runs into billions of dollars. India's pharma exports currently stand at $25 billion, and there is ample scope for growth. The standards for checking the quality of medicines in the country are being seen to be different in each state. If India wants to position its products in the global market, it is essential to maintain consistency in quality standards.

At the policy level, with global trade expected to pick up in the coming year, India needs strong policy to achieve higher export growth. It is a positive thing that the budget did not increase the tariff, but the expectation that it will be reduced to enable Indian industrial houses to compete with global trade has not materialized. If the country's exports are to be increased, there is a need of time for constant change in our trade policies amid the changing global environment.