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India’s merchandise exports up 3.12% in January
India’s merchandise exports reported a 3.12% increase to $36.92 billion in January despite global headwinds, showing positive growth for the second consecutive month.
India’s merchandise exports reported a 3.12% increase to $36.92 billion in January despite global headwinds, showing positive growth for the second consecutive month, with overall exports -- both goods and services -- estimated to have risen 9.27% to $69.72 billion in the month, government data released on Thursday said.
Releasing trade data for January, commerce secretary Sunil Barthwal said, “Despite the Red Sea crisis, recession in economies of advanced countries and falling prices of commodities, we have been able to achieve positive merchandise growth in this month [January], which is quite significant. It is just not marginal...”
The World Trade Organisation (WTO) in October slashed its projection for world merchandise trade growth in 2023 to 0.8% from its earlier estimate of 1.7% in April.
According to official data, India’s merchandise exports in December saw a marginal 0.96% year-on-year growth to $38.45 billion after falling by over 3% in November. Monthly merchandise exports in the ongoing financial year (April 2023 to March 2024) saw a poor start with sharp y-o-y contractions in four consecutive months (April, -12.74%; May -10.36%; June -18.78%; and July -9.98%). August saw the first growth (3.79%), but exports again contracted again by 2.7% in September. Merchandise growth in October was, however, positive at 5.97%.
Cumulatively, merchandise exports saw a sharp recovery from over 12.74% y-o-y contraction in the first month of the financial year to 4.89% contraction in the first 10 months (April 2023-January 2024). Barthwal expected the trend to continue on government’s efforts to “navigate” the global crisis by keeping logistics costs low and by exploring new markets with “much larger” product basket.
India’s merchandise imports also rose by about 3% to $54.41 billion in January after witnessing contraction for two consecutive months and the trade deficit in the month narrowed to a nine-month low at $17.49 billion .
Cumulatively, India’s overall exports (merchandise and services combined) in April-January 2023-24 are estimated at $638.37 billion, a year-on-year contraction of 0.19%, which is expected to be covered in the remaining two months of the current financial year, Barthwal added. Overall imports in April-January 2023-24 are estimated to be $708.79 billion, a y-o-y fall of 5.69%, according to the data. The overall trade data is provisional because services data for January is an extrapolation of previous month’s numbers as data for services sector are released by the Reserve Bank of India (RBI) with a lag.
Barthwal said the government is taking all necessary steps to mitigate external risks such as the Red Sea crisis. The government has held three meetings with exporters, ministries related to exports of goods and services and other stakeholders, he said. “We also try to tell banks that whatever maximum credit can be given during this period to our exporters that should be extended. Exim bank and ECGC [Export Credit Guarantee Corporation of India] were told not to increase insurance premium rates. This overall positive atmosphere which we created helped in the export growth,” he explained, referring to positive merchandise exports growth in January.
He assured the industry that the government would continue this effort in 2024-25 to ensure “a positive growth in our exports” and added that it has constituted a task force to identify non-tariff barriers (NTBs) faced by Indian exporters in global markets and take necessary actions to help exporters secure market access.
Federation of Indian Export Organisations president (officiating) Israr Ahmed said, “The increase in exports despite the Red Sea crisis posing challenge on the logistics front, goes to show not only the resilience of the sector but also of the export community, who have continuously been braving such odds since Russia-Ukraine war.”
Main growth drivers of merchandise exports in January included petroleum products, engineering goods, iron ore, electronic goods, drugs and pharmaceuticals, which is itself is a good sign as most of these sectors are labour-intensive sectors giving boost to employment creation in the country, he said.
Ahmed said: “Much will depend on the new agreement to be signed with buyers during the new fiscal [2024-25] as exporters have been absorbing the burden of increased freight cost as per the old agreement.” He said the need of the hour is to address the Red Sea crisis challenges by ensuring availability of marine insurance, regular supply of containers, and rationale increase in freight charges. “The sector also needs easy and low cost of credit, marketing support, besides the conclusion of some of the key FTAs with UK, Oman and EU.”
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