India@75: Exports a key element in driving India's economic growth

NEW DELHI: One of the key factors driving the economic growth of any country is its exports. India witnessed 600 times growth in total exports since independence.


The years after independence posed numerous challenges for the Indian economy in terms of foreign trade.

India exported a mere $1.27 billion worth goods and services in 1950-51. Growth remained almost stagnant in the next few decades as well owing to strict policy regimes.

Commodities like jute, tea, cotton and textiles dominated exports from India to the rest of the world. However, demand for imported goods and services were the much higher among people than the exports recorded by the country. Thus, import bill increased substantially, while exports remained stagnant.

Moreover, licences were required for starting new companies, for producing new products or expanding production capacity.

Clearly, India was not a favoured market for foreign investors.

India also imposed high tariffs on a number of products bought from abroad.

Over the years, India opened its economy to the world. Especially, after implementation of liberation, privatisation and globalisation (LPG) policies by the Centre.

The then finance minister in his budget speech for the year 1991 had explicitly stated that trade policy reforms were an important part of economic reforms initiated by the country.

In the chart below, we can clearly see the surge in value of goods and services exported by India, prior to the adoption of 1991 reforms.


In spite of the devastating second wave of Covid-19 in April-May 2021, exports showed a positive sign. It has remained over the $30 billion-mark since March last year.

India achieved its ambitious target of crossing $400 billion exports on March 23, with 9 days remaining in the current financial year 2021-22. With this, India has achieved a key milestone in its journey towards becoming 'aatmanirbhar'.

Why exports are important for an economy
Exports are one of the fundamental drivers of growth for any economy. It can influence a country's GDP, exchange rate, level of inflation as well as interest rates.

A robust export data is beneficial as it leads to increase in job opportunities, enhances foreign currency reserves, boosts manufacturing and also increases government's revenue collection. It is also a good means by which a country can bring itself out of the recession phase.

Exporting to countries with a favourable economic climate helps in increasing the GDP levels as well as helps in reducing unemployment.



Stay informed with the latest Business News on Times of India. Explore updates on International Business, gain insights with Financial Literacy tips, and make use of Financial Calculators. Don’t forget to check the list of Bank Holidays in 2025, including Bank Holidays in January.


Ready to Master Stock Valuation? ET’s Workshop is just around the corner!