Exports shrink 5.12% in Oct on sharp fall in oil, jewellery shipments

Crude oil price in world markets had fallen by over a third in October from the year ago period as the global economy grappled with the shock dealt by the pandemic

Merchandise exports and imports contracted in October, hammered by a domestic and global recession amid the coronavirus pandemic, commerce ministry data released on Friday showed.

A file photo of Kolkata Port. The shipping ministry has set up a panel comprising chairmen of the Cochin, Paradip and VO Chidambaranar ports to work out an amicable settlement to the issue. (Indranil Bhoumik/Mint)

Exports contracted by 5.12%, falling back into the negative zone after growing in the previous month, as shipments of petroleum products, gems and jewellery and electronic items fell sharply on account of a slump in global demand and disruptions in local supply chains.

Imports too fell sharply, by 11.53%, led by a decline in purchases of transport equipment, crude oil and machinery. Crude oil price in world markets had fallen by over a third in October from the year-ago period as the global economy grappled with the shock dealt by the pandemic.

With $24.89 billion merchandise exports and $33.61 billion imports, merchandise trade deficit in October stood at the highest so far this fiscal at $8.71 billion. However, it was narrower than the $11.75 billion reported in the same month a year ago.

Non-oil and non-gem and jewellery exports showed a positive growth of 6.51% in October to $20.31 billion. Items like rice, iron ore and pharmaceuticals showed strong exports growth in October.

Renewed lockdowns in some advanced economies, however, may have suppressed the level of non-oil exports in November, said Aditi Nayar, vice president and principal economist, ICRA Ltd.

In September, exports had briefly shown a 6% growth after six months of double-digit contraction as businesses battled local movement restrictions and a demand slump. Global volumes of merchandise trade is set to decline 9.2% in 2020, followed by a 7.2% rise in 2021, the World Trade Organisation has projected.

The government has been taking steps to boost local production as well as exports by supporting micro, small and medium enterprises, the backbone of manufacturing and exports.

The government on Wednesday announced a Rs 1.45 trillion incentive for global businesses setting up production facilities in India in sectors like automobiles, pharmaceuticals and textiles.

During the April-October period, India’s merchandise exports stood at $185.4 billion, while imports stood at $286.07, with a trade deficit of about $100 billion.