Trade Index Revision: DGCI&S Updates Base Year of India’s Merchandise Trade Indices to 2022–23 (Why It Matters for Policy Precision)
The Directorate General of Commercial Intelligence and Statistics (DGCI&S) has revised the base year for India’s Merchandise Trade Indices (MTI) from FY 2012–13 to FY 2022–23 (2022–23 = 100) to better reflect structural shifts in India’s trade and the economy. This update strengthens the relevance and reliability of export/import price and volume indicators used in GDP compilation, external sector assessment, and evidence-based trade policymaking.
What are Merchandise Trade Indices (MTI)?
Merchandise Trade Indices are compiled and published by DGCI&S to measure changes in the unit values (prices) of India’s exports and imports over time, serving as key indicators of external sector price movements. The indices are widely used in economic analysis, including national accounts compilation and assessment of terms of trade.
In practice, MTI includes measures such as Unit Value Indices (UVI) and Quantity Indices (QI), which help distinguish whether trade value changes are driven more by prices (unit values) or by quantities.
Why was the base year changed to 2022–23?
DGCI&S notes that over the last decade India’s trade basket has changed substantially due to new commodities, technological advancements, global supply chain restructuring, and changes in relative price structures. Because of these shifts, the earlier base year (FY 2012–13) was no longer adequately capturing the prevailing trade structure, prompting the move to FY 2022–23 for improved alignment with contemporary macroeconomic indicators.
The revision was undertaken based on recommendations of a DGCI&S-constituted committee chaired by Prof. Nachiketa Chattopadhyay (Indian Statistical Institute, Kolkata), which reviewed methodology, data coverage, weighting structure, and compilation practices and suggested refinements aligned with international best practices.
What changes in the revised MTI series (Base: FY 2022–23)?
The revised series aims to improve the analytical usefulness of MTI by making the index structure more representative of current trade patterns through methodological and coverage updates recommended by the expert committee. DGCI&S also states that detailed methodological documentation is available in the committee report on the base year revision.
DGCI&S explains that MTI interpretation is anchored in concepts like: UVI indicating growth in average unit value (price) of traded items relative to the base year, and QI being derived by dividing value indices by unit value indices to approximate quantity movement (with caution for base effects).
Why this revision improves policy precision
DGCI&S highlights that these indices are used by key institutions: the National Accounts Division (MoSPI) uses export and import UVI as deflators to estimate real exports and imports in GDP compilation, while RBI uses them for external sector assessment, balance of payments analysis, and evaluation of price competitiveness. Various ministries and agencies also use MTI to frame and review trade-related policies and to assess movements in international prices.
For UPSC Mains, this is a good example of “better statistics → better policy,” because updated weights and baskets reduce measurement error in key macro variables (real trade, terms of trade trends), improving targeting and evaluation of trade and industrial interventions.
FAQs
Q1. What is DGCI&S and what does it publish?
DGCI&S (Ministry of Commerce & Industry) compiles and publishes Merchandise Trade Indices to track changes in unit values (prices) of India’s exports and imports over time.
Q2. What is the new base year for India’s Merchandise Trade Indices (MTI)?
The base year has been revised from FY 2012–13 to FY 2022–23, with FY 2022–23 set as 100.
Q3. Why was the base year revised?
Because India’s trade basket and economy have undergone structural changes (new commodities, technology shifts, supply chain restructuring, relative price changes), the earlier base year no longer reflected the prevailing trade structure.
Q4. How are these indices used in GDP calculation?
MoSPI’s National Accounts Division uses export and import Unit Value Indices as deflators to estimate real exports and real imports in GDP compilation.
Q5. How does RBI use these indices?
RBI relies on MTI for external sector assessment, balance of payments analysis, and evaluation of price competitiveness.
Q6. Who recommended the methodological refinements for this revision?
The revision was undertaken on the recommendations of a committee constituted by DGCI&S chaired by Prof. Nachiketa Chattopadhyay (ISI Kolkata).
Q7. Where will the revised indices be available?
DGCI&S states that the revised MTI (Base: FY 2022–23) will be released on the official DGCI&S website, along with methodological documentation referenced in the committee report.
