NAME-AJINKYA-SATHE 2

NAME : AJINKYA SATHE. ROLL NO : 39. TOPIC : Role of Exports in Improving India's Balance of Payments.

[Audio] Role of Exports in Improving India's Balance of Payments How exports—goods, services and remittances—strengthen India's external position, stabilise the rupee, and support sustainable economic growth..

[Audio] Understanding India's Balance of Payments (BoP) BoP records cross-border transactions: current account (trade in goods & services, income, transfers) and capital account (FDI, portfolio flows). Exports bring foreign currency inflows, directly narrowing the current account deficit and bolstering reserves. Persistent deficits pressure the rupee and raise vulnerability to shocks..

[Audio] Recent Export Growth: A Bright Spot Strong 2025 Performance Apr–Aug 2025: Exports rose 5.19% to USD 346.10B. Merchandise +2.31%, services +8.65%—a balanced upswing across sectors. Market Reach Top markets: USA, China, Germany, UAE, Brazil—diversified demand reduced concentration risk. Outperforming the World India's export growth (7.1% in 2024) surpassed the global average (2.5%), showing competitive resilience..

[Audio] Services Exports: The Invisible Engine Services have transformed India's BoP: their share of world services exports rose from 1.9% (2005) to 4.3% (2023). IT & software lead with ~10.2% global market share—India is the world's second largest exporter. Remittances, business services and digital exports supply stable foreign exchange, cushioning merchandise trade shocks..

[Audio] Impact on Current Account & FX Reserves Recent Data Q1 2025-26 CAD narrowed from 0.9% to 0.2% of GDP; services earnings hit $47.9B, offsetting a merchandise gap of $68.5B. Reserve Buffer RBI forex reserves at USD 640.3B (Dec 2024) provide a cushion against volatility and reduce rollover risk..

[Audio] Challenges to Export Growth & BoP Stability Geopolitical Disruptions Trade-route shocks (Red Sea crisis, Ukraine conflict) increased freight costs and transit times. Protectionism & NTMs Non-tariff measures affect ~31.6% of product lines—technical barriers and tariffs raise export friction. Commodity & Energy Costs Rising import bills for energy widened the trade deficit (e.g., $25B in Dec 2025), offsetting export gains..

[Audio] Government Initiatives to Boost Exports FTAs & Market Access Negotiations with EU, UK and ongoing FTAs expand tariff-free access and reduce barriers—UAE-India CEPA is a working model. Product Diversification Policy focus on pharmaceuticals, electronics, engineering goods and green tech to move up value chains. Skills & Innovation Skills & Innovation Upskilling, R&D incentives and export promotion schemes sustain IT and services competitiveness..

[Audio] Export-Led Growth: Broader Economic Benefits Export expansion drives job creation across manufacturing, agriculture and services; it attracts FDI, strengthens supply chains, and increases foreign-exchange earnings—making the economy more resilient to external shocks and supporting long-term growth..

[Audio] Visualising Export Impact Key visuals: outperformance vs global growth, composition of exports, CAD improvement, and market geography—these together explain the export-BoP link..

[Audio] Conclusion & Call to Action Keep Exports Diversified Broaden product and market mix to reduce concentration risks and external vulnerability Invest in Services & Innovation Support IT, digital services and high-value manufacturing to sustain FX inflows. Deepen Global Partnerships Conclude FTAs, streamline trade logistics and address NTMs to improve market access. Exports are central to strengthening India's BoP. Policy continuity, targeted reforms and private-sector dynamism will turn export momentum into durable external stability..