India’s merchandise exports rose 1.27 per cent year-on-year in June to $22.57 billion, reversing a trend that started in December 2014 due to weak global demand and a fall in commodity prices, government data showed.
In value terms, this was the highest since March when shipments were worth $22.7 billion, but it had in that month shrunk 5.5 per cent. The low-base effect has helped this June as exports in June 2015 had shrunk 16 per cent over June 2014. In absolute terms, neither the $22.57 billion worth of exports in June 2016 nor the $22.28 billion in June 2015 was near the $26.47 billion in June 2014.
Meanwhile, imports during June 2016 slid 7.33 per cent to $30.69 billion. Gold imports fell 38.5 per cent to $1.2 billion, while oil imports contracted 16.4 per cent to $7.2 billion. A growth in exports combined with a contraction in imports helped narrow the trade deficit in June to $8.1 billion from $10.8 billion in June 2015. However, on a month-on-month basis, trade deficit has widened in June from $5.8 billion in May.
India’s goods exports returning to the positive growth territory comes at a time when the World Trade Organisation (WTO) had on July 8 said it introduced a new World Trade Outlook Indicator (WTOI) to provide “real time” information on trends in global trade.
“For the current period, the WTOI came in slightly below trend, with a reading of 99.0, and with a downward tendency in the most recent data, signalling that trade growth will continue to be sluggish in July and August… At present it (WTOI) suggests that trade growth will remain weak into the third quarter of 2016,” the WTO had said.
Commerce Minister Nirmala Sitharaman had on Wednesday told The Hindu that the contraction in exports was one of her biggest concerns.
However, she added: “We have had extensive consultations with every export sector, and not once have I heard anybody tell me that exports are suffering because of our policies. They have conceded that global situation is bad. Commodity prices are coming down. Currency fluctuation is becoming the order of the day rather than an exception. Exporters are suffering, but they have said that the hand holding that the government is doing has helped.”
According to Sanjay Budhia, Co-Chairman of the National Committee on International Trade Policy & Exports of the industry body CII, the commerce ministry should “continue and further expand the incentive programmes to ensure that the positive momentum of export growth is maintained.”
T. S. Bhasin, Chairman of the engineering exporters apex body EEPC India, said: “The turnaround in the headline exports numbers has come about in the face of pick up in some agri products and iron ore. However, the key sectors of engineering, gems and jewellery and petroleum products stay muted, requiring further support for improving the competitiveness in a difficult global market where China and Japan continue to stay weak.”
S C Ralhan, President of Federation of Indian Export Organisations (FIEO), said though the positive growth has instilled optimism among exporters, global scenario remained challenging. He said positive exports in segments including engineering, marine products, drugs and pharma, plantation commodities, electronic goods, carpets and handicrafts were encouraging as these were high employment generating sectors.
“A marginal cause of concern is the decline in labour-intensive sectors such as gems & jewellery and apparel exports. However firming of gold prices and the government’s recent package given to the textile and apparel sector will lead to better results in short span of time,” he said.