IBEF: October 16, 2020
Exports rose by 5.99% in September for the first time in seven months, boosted by products such as pharmaceuticals and engineering goods.
The growth figure was higher than the 5.27% projected by the government in the first week of October. Growth is significant as it contracts not only six months before September, but also in all previous months of the current calendar year, except for February.
In September, outbound shipments stood at $27.58 billion versus $26.02 billion in the year-ago month, trade data released by the Department of Commerce on Thursday showed. In September, the export number was only marginally lower than the $27.65 billion pre-Covid average in February. In exports, twenty-two of the 30 major products saw growth. Ms. Aditi Nayar, principal economist at ICRA said, “The reasonably broad-based pick-up in merchandise exports in September has come as a relief, and signals on its sustainability are anxiously awaited in the light of the second wave of Covid-19 infections being experienced in many trading partners”.
FIEO export body President Mr. Sharad Kumar Saraf stated that exporters began receiving inquiries and orders as market practises and economic sentiments were inching towards global normalcy, helping many industries to further display improved export output, which is likely to get better and better in the next few months.
Exports of high-value goods have also begun to reverse the weakening trend. Exports of engineering goods rose by 5.44%, while miniature electronic goods rose by 0.07%.
Engineering body EEPC India Chairman Mr. Mahesh Desai said: “The challenge in the external trade would continue given the present state of global health emergency.”
On the other hand, imports dropped by 19.6% to $30.31 billion in the month, compared to $37.69 billion in the same time last year. The decline in oil and commodity prices (35.88% decline) played an important role in this. Transport equipment was 47.08% lower and electrical and non-electrical machinery was 36.76% lower.
As such, in the year-ago era, the trade deficit declined 76.66% to $2.72 billion from $11.67 billion.
Non-oil, non-gold imports decreased by 12.63% in imports to $23.88 billion in September, compared to $27.33 billion in the month of last year. This import category denotes domestic demand. As such, it may still take some time for domestic demand to recover, even as the rate of contraction in non-oil imports has decreased from $30 billion in each of the previous two months.
Mr. Prhalathan Iyer at Exim Bank, said, “The recovery in exports could only be considered sustainable if there is also pick-up in imports of non-oil, non-gold items”.
In the first six months of the current financial year, exports fell 21.31% to $125.25 billion. Chairman Mr. Mohit Singhla of the Trade Promotion Council of India stated that food and agri-food exports reported nearly 45% growth in the second quarter of FY21 and that demand for these products overseas will continue to increase. Steel, mining, pharma, home sanitation, and home furnishing are the other sectors that will see demand increase globally.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.