India’s merchandise exports growth slipped into the negative zone in November, as challenges in the key markets saw no sign of easing, but the government insisted green shoots are “stabilising” and for the full year shipments could reach “decent levels.”
Exports in November were down 2.8% on year to $ 33.9 billion, while imports saw a contraction of 4.3% to $ 54.98 billion. Trade deficit came down to $ 20.58 billion in the month, a steep decline from a high $29.9 billion (revised from $31.46 billion) in October.
“Green shoots are getting strengthened. We have beaten the global trends though the global trade is suffering,” Commerce Secretary Sunil Barthwal said, and cited the United Nations Conference on Trade and Development Report (UNCTAD) which has estimated global merchandise trade to decline 7% in 2023.
Barthwal said trends show that the closing months of the financial year deliver the best performance for exports and looking at the export orders “we should be able to sustain and reach a decent level this year”.
The decline in exports in November and much of this year has been due to the fall petroleum and engineering products shipments. These two product categories account for almost half of India’s exports. Petroleum products exports are down by 15.17% in the financial year while engineering goods have declined 1.78%.
The support to the export earnings have been provided by the emerging sector of electronics where the growth of 23.56% has been seen this financial year but in value terms it is less than a quarter of petroleum exports. In November support also came from gems and jewellery, iron ore, pharma and minerals.
While exports this financial year have been over $33 billion every month, the higher base of last year is amplifying the challenges being faced by the exporters.
Apart from demand, another factor impacting export numbers is year-on-year decline in prices of crude oil that is directly impacting the realisations of petroleum product exports.
In April-November exports were down 6.5% down to $ 278.8 billion while imports during the period were down 8.67% to $ 445.15 billion. The value terms gap in exports in April-November period of this year and last year is $20 billion of which $16 billion is due to petroleum and gems and jewellery sectors.
The merchandise trade deficit during April-November stood at $ 166.35 Billion registering a decline of 12.08%.
“Better-than-expected performance of exports resulted in a narrower deficit of $ 20 billion…. Over the remainder of this fiscal year, we project the monthly trade deficit in a range$20-25 billion, resulting in a current account deficit of around 2.5% of GDP in Q3 FY2024 and 1.7% of GDP in Q4 FY2024. Overall, we foresee the CAD in a range of 1.7-1.8% of GDP in FY2024,” Chief Economist at ICRA Aditi Nayar said.
Overall exports in November, including services exports, was up 1.2% to $ 62.58 billion and imports were 6.1% down to $ 67.88 billion. Services exports were up 8.7% to $ 28.69 billion while imports were down 12.9% to $13.40. In April-November services exports were up 5.93% to $ 220.6 billion and imports were down 3.12% to $ 115.75 billion.