India’s merchandise exports grew 4.8 per cent year on year to $35.45 billion in September, according to the data released by the department of commerce on Friday.
This is a sharp contrast with preliminary trade data released over 10 days ago that pointed to a 3.5 per cent contraction at $33.81 billion, amid slowing demand of Indian goods due to fear of recession in advanced economies.
The growth in exports was 4.5 per cent on a sequential basis and nearly 17 per cent during the first six months of the financial year (April-September).
A Sakthivel, president, Federation of Indian Export Organisations (FIEO) said that exports of most economies are contracting and the next few months will be challenging unless the geopolitical situation improves drastically.
“However, the decline in imports is encouraging despite the huge jump in import of coal and transport equipment. We hope the energy prices will come down further providing more relief to us on the trade deficit,” said Sakthivel.
Aditi Nayar, chief economist at Icra said that the upward revision in merchandise exports has converted the initial contraction into a low growth. “This is particularly welcome, given the growing concerns around the strength of global demand and the strengthening of the INR against many competing emerging market currencies,” Nayar said.
The growth in exports in the month of September was mainly driven by a jump in demand for petroleum products, electronic goods, gems and jewellery, organic and inorganic chemicals and drugs and pharmaceuticals.
However, items such as engineering goods that comprised over 23 per cent of the total exports in September contracted 10 per cent on year to $8.39 billion. Similarly, export of other key export items from labour intensive industries such as cotton yarn, apparels, handicrafts also witnessed a decline in September as compared to a year ago period. Outbound shipments for iron ore and plastics also continued to decline.
Non-petroleum, non-gems and jewellery exports declined 4.58 per cent on year in September to $24.22 billion. According to Nayar contraction in non-petroleum, non-gems and jewellery exports suggests a sombre outlook for exports in the near-term.
In terms of value, exports had peaked at $42 billion in the month of March. After June, outbound shipments gradually started declining, with geopolitical tensions, affecting demand.
Imports in September were $61.16 billion, which is an increase of 8.66 per cent as compared to last year. This resulted in a trade deficit of $25.71 billion as against $22.47 Billion in September 2021. However, the deficit eased sequentially to $27.98 billion in August, after hitting a record high of $30 billion in July.
The World Trade Organisation (WTO) has also painted a grim picture for the outlook of global trade. According to WTO’s trade barometer, the volume of world merchandise trade plateaued with year‐on‐year growth slowing to 3.2 per cent in the first quarter of 2022, down from 5.7 per cent in the fourth quarter of 2021.
WTO has projected 3 per cent growth in volume of global merchandise trade in 2022 compared to 9.8 per cent growth in 2021. “Uncertainty surrounding the forecast has increased due to the ongoing conflict in Ukraine, rising inflationary pressures, and expected monetary policy tightening in advanced economies,” it said.