Trade data flags testing time for goods exports

Exports fall 1.15% to $33 billion, imports exceed $60 billion, widening trade deficit

Exports fall 1.15% to $33 billion, imports exceed $60 billion, widening trade deficit

India’s merchandise exports contracted 1.15% year-on-year in August to $33 billion, while inelastic oil and coal imports continued to climb, lifting imports above the $60 billion mark for the sixth consecutive month.

The country’s merchandise trade deficit narrowed slightly sequentially from a record high of $30 billion in July, but remained the second-highest on record at $28.68 billion, and widened significantly from to $11.7 billion in August 2021. Preliminary July trade data had also shown a decline of 0.8%. of exports, which was later revised to an increase of 2.1%. The last time India recorded a contraction in its exports was in February 2021.

In addition to global headwinds, BVR Commerce Secretary Subrahmanyam attributed the drop in outbound shipments, which fell 9% sequentially, to a growing trend of international buyers requesting shipment deferrals of confirmed orders, as well as to the range of measures taken by the government to try to curb high inflation.

“There is some concern about Christmas orders,” Mr Subrahmanyam observed. ‘Exporters’ order books are full, but there are instances where buyers are asking for shipments not to be shipped,’ he said, adding that similar restrictions to ‘almost’ be on a negative list for exports of items such as wheat, steel and iron pellets. to control inflation, had also had an impact on foreign trade.

While merchandise exports averaged $38.5 billion per month between April and August, totaling $192.5 billion, Mr. Subrahmanyam forecast that India’s total outbound shipments in 2022-23 would reach 470 billion dollars, or at least 450 billion dollars in the “worst case”. To achieve this, exports must average between $36.8 billion and $39.6 billion over the next seven months.

Hinting that the government was working on a major package to boost exports, which is expected to be unveiled in the coming weeks, he said: “We would like to see the trend of sluggish exports change, and measures will be taken to boost exports. exports. India will also unveil a new foreign trade policy on September 30 which is expected to boost exports.

Coal and oil imports were behind the rise in imports, but the overall increase in inbound shipments was also a sign of healthy demand in the economy, as 25% of India’s imports were for goods consumption, said the Secretary of Commerce.

“The surge in imports reflects strong demand from the domestic economy due to the robust growth and solid fundamentals of the Indian economy. In terms of value, the surge in imports is driven by a combination of quantity and price factors. price,” the Department of Trade and Industry said.

While the goods trade deficit is now around $125 billion for the April-August period, Subrahmanyam said the overall trade deficit, taking into account around $300 billion in services exports in 2022- 2023, should be 160 to 180 billion dollars.

“With remittances at $90 billion, we expect the current account deficit to be around 3% of GDP, which is not bad but we have to be careful. But the main concern right now is inflation and measures to curb rising prices will lead to challenges on the export and import fronts,” he said.

Gold imports fell 47% to $3.5 billion in August, from $6.7 billion a year earlier, and were down 12.8% in the first five months of this fiscal year, reflecting rising import duties levied by the Center after a surge in imports. were working, officials said.

“The non-oil deficit accounted for nearly 60% of the total trade deficit in August, even though gold imports halved,” noted Aditi Nayar, chief economist at ratings firm ICRA. “The decline in exports year-on-year, driven by sectors such as engineered goods, gems and jewelry, and yarns and textiles, suggests a cautious outlook for external demand going forward. “, she warned.

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