Mumbai: The hallmark of the past four years for the Indian economy was the drop in global crude oil prices that made it easy to manage not just inflation but also the current account deficit. With crude oil showing signs of climbing back, the focus on boosting exports is back on the table.

The good news is that exports showed a healthy growth of 11% in March, which took the growth for the full year to 9%. Exporting farm products was easier, though Indian manufacturers had a tough time selling their finished wares. For them, the situation could get worse before it gets better.

The slowdown in global economic growth is not helping in terms of demand as leading advanced economies are grappling with their own growth issues.

The odds are stacked against exports growth in the coming months, as projections of global economic growth has been cut by multilateral agencies such as the International Monetary Fund (IMF). Indian companies would find it difficult to sell if buyers are not interested because of the size of their own purses is shrinking.

However, what should worry Indian policymakers more is the consistent fall in exports as percentage of GDP over the last five years.

As the chart above shows, exports haven’t matched the growth of the economy. Exports would be 11% of GDP in fiscal year 2019 (FY19), going by the Central Statistics Office’s GDP growth projection.

This is far lower than the peak of 16% achieved in FY14.

India needs more competitiveness in exports and it is unlikely to be achieved by just a depreciating currency. The story has been to gain competitiveness to increase market share so far.

In the wake of a slowing global economy, the narrative is now to protect market share. Gaining competitiveness becomes that much more critical.

As exports get fixed, the benefit from lower crude oil prices could end soon for the current account balance.

The country’s import bill shrank mainly because of the fall in crude oil prices in FY19. However, crude oil has gained 32% since January this year.

As analysts at Nomura Securities Co. Ltd note, crude oil is a key risk for the country’s balance of payments. “Higher oil prices are an upside risk. We estimate that every $10 per barrel rise expands CAD (current account deficit) by 0.4% of GDP," the brokerage firm said in its note.