Govt updates merchandise trade index base year to FY23 for better accuracy

Government revises the base year for merchandise trade indices from FY13 to FY23 to capture structural shifts in India's trade basket and align the indices with current macroeconomic realities

The government has revised the base year of merchandise trade indices from FY13 to FY23 to better capture “structural changes in the economy, shifts in commodity composition, evolving trade patterns, and the need for alignment with contemporary macroeconomic indicators”.

 

The indices are widely used in economic analysis, including national accounts and measuring the country’s terms of trade, as they track price trends in exports and imports.

 

For instance, the National Accounts Division under the Ministry of Statistics and Programme Implementation (MoSPI) uses the export and import unit value indices as deflators for estimating real exports and imports in gross domestic product (GDP) compilation. The Reserve Bank of India (RBI) uses them for external sector assessment, balance of payments analysis and evaluation of price competitiveness. Government departments rely on them to frame and review trade-related policies and to assess movements in international prices.

 

 

The revision in the base year has been carried out by the Directorate General of Commercial Intelligence and Statistics (DGCI&S), under the Department of Commerce.

 

“Over the years, the base year of the indices has been periodically revised to reflect structural changes in India’s trade composition and evolving global trade patterns. The most recent revision updates the base year to FY 2022–23 (2022–23 = 100), replacing the earlier base of FY 2012–13, thereby ensuring that the indices accurately represent the current structure of India’s merchandise trade,” the Department of Commerce said in a statement on Friday.

 

According to the government, India’s trade basket has undergone substantial changes due to the emergence of new commodities, technological advancements, global supply chain restructuring and changes in relative price structures over the last 10 years. As a result, the FY13 base year did not adequately reflect the prevailing trade structure.

 

The revision ensures improved relevance, reliability and analytical usefulness of the merchandise trade indices for policymakers, researchers and other stakeholders, the statement said.

 

The revision has been undertaken on the recommendations of a committee headed by Nachiketa Chattopadhyay, Professor, Indian Statistical Institute, Kolkata. The committee, constituted by DGCI&S, examined the existing methodology, data coverage, weighting structure and compilation practices, and recommended suitable refinements in line with international best practices.