After being in the negative territory for over 14 months, India’s exports are expected to start picking up from the next fiscal, said the Economic Survey for 2015-16.
The Survey said the continuing low-commodity prices globally augurs well for sustaining low trade and current account deficit (CAD). The CAD is the difference between inflows and outflows of foreign exchange.
“As such, while export slowdown may continue for a while before picking up in the next fiscal,” it said.
Exports dipped for the 14th month in a row, down 13.6% in January 2016 to $21 billion due to fall in shipments of petroleum and engineering goods, although the trade deficit showed improvement. During April-January 2015-16, exports declined by 17.65% to $217.67 billion against $264.32 billion in the year-ago period.
However, the survey added that the India’s external sector outcome continues to be strong because of strong macroeconomic fundamentals and low commodity prices.
It also said that the global economic outlook remains under the cloud of uncertainty for long, with periodic financial market turbulence. The recent bout of uncertainty owes to developments and concerns about China’s growth, financial markets and currency, it said, adding that the spillovers are causing shocks in vulnerable economies.
The survey said that the CAD is likely to be in the low range of 1-1.5%.
On free trade agreements (FTAs), the survey said FTAs have pushed up imports more than the country’s exports. “FTAs have led to increased imports and exports, although the former has been greater...Most likely because India maintains relatively high tariffs and hence had larger tariff reductions than its FTA partners,” it said.