India’s merchandise exports rose by 3.12% to $36.92 billion in January, overcoming global challenges and registering positive growth for the second month in a row. The government data released on Thursday also showed that the overall exports – both goods and services – increased by 9.27% to $69.72 billion in the month. 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) had cut down its forecast for world merchandise trade growth in 2023 to 0.8% from its previous estimate of 1.7% in April. As per the official data, India’s merchandise exports in December had grown by a slight 0.96% year-on-year to $38.45 billion after dropping by more than 3% in November. Monthly merchandise exports in the current financial year (April 2023 to March 2024) had a bad start with steep y-o-y declines in four successive months (April, -12.74%; May -10.36%; June -18.78%; and July -9.98%).
August saw the first growth (3.79%), but exports again shrank by 2.7% in September. Merchandise growth in October was, however, positive at 5.97%. Cumulatively, merchandise exports had a sharp recovery from over 12.74% y-o-y decline in the first month of the financial year to 4.89% decline 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 went up by about 3% to $54.41 billion in January after contracting for two consecutive months and the trade deficit in the month reduced 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 decline 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 drop 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 delay. 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.
Despite the logistical difficulties caused by the Red Sea crisis, India’s exports have risen, demonstrating the strength and perseverance of the sector and the exporters, who have faced similar challenges since the war between Russia and Ukraine, said Israr Ahmed, the acting president of Federation of Indian Export Organisations.
He said that the main contributors to the merchandise exports growth in January were petroleum products, engineering goods, iron ore, electronic goods, drugs and pharmaceuticals, which are mostly sectors that create more jobs in the country, indicating a positive sign.
Ahmed added: “The new fiscal [2024-25] will depend a lot on the new agreement with buyers, as exporters have been bearing the increased freight cost as per the old agreement.” He stressed the need to tackle the Red Sea crisis issues by ensuring marine insurance, regular container supply, and reasonable freight charges. “The sector also requires low and easy credit, marketing assistance, and the finalisation of some of the important FTAs with UK, Oman and EU.”
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