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India’s goods exports rise in signs of trade recovery.
Oct 17, 2023

India’s merchandise export growth turned positive for the first time in the current financial year with a 3.86% year-on-year rise in August at $38.45 billion, commerce secretary Sunil Barthwal said on Friday, citing revised figures that broke a monthly contraction sequence which started in February 2023 due to global headwinds.

Initial data released on September 15 reported a 6.86% y-o-y dip in merchandise exports in August to $34.48 billion. Officials said revisions of export figures are normal as some consignments that miss the customs radar are updated later.

According to the official data released on Friday, Indian merchandise exports year-on-year dipped by 2.6% to $34.47 billion in September 2023, while imports also fell by 15% to $53.84 billion, the 10th monthly decline in a row. This led to narrowing of the merchandise trade deficit to $19.37 billion in September, the lowest in five months.

Merchandise exports contracted by 8.77% to $211.4 billion in the first six months of current financial year (April-September 2023), the data showed. Imports also fell by 12.23% to $326.98 billion during this period with a trade deficit of $115.58 billion.

Commenting on the overall (merchandise and services combined) trade performance, Barthwal said 'green shoots' are visible on the export front, despite global headwinds and adverse geopolitical developments. According to the latest data, the fall in overall exports (merchandise and services combined) in April-September 2023 has narrowed to 2.97% on an annualised basis. Overall imports during the period are estimated to contract 10.14% over April-September 2022, it said. As actual services data comes with a lag, figures for services in September are an extrapolation of the previous month’s data.

Barthwal said 'there is optimism' for the coming months since the services sector is doing well, and the fall in merchandise exports has tapered. 'Weekly trend is also positive in October (2023),' he said, adding that India’s exports may see a positive growth in FY24. The World Trade Organisation (WTO) has, however, downwardly revised its global trade forecast from 1.7% in April to 0.8% in October.

The optimism comes at a time when India is making efforts to explore new markets and import substitution through ?1.97 lakh crore production-linked incentive (PLI) scheme. India has been supplying office equipment to Turkey; and has found takers for pharmaceuticals and drug formulations in Finland, Malta and Philippines.

'India’s merchandise trade deficit compressed considerably to $19.4 billion in September 2023 from $28.0 billion in the year-ago month, with a sharp contraction in imports reflecting the impact of lower commodity prices,' Aditi Nayar, chief economist and head (research and outreach), ICRA Ltd, said.

'The narrower-than-expected merchandise trade deficit print augurs well for the current account deficit for Q2 FY2024, although it is expected to enlarge vis-à-vis the Q1 levels. Crude oil price volatility amidst geopolitical tensions remains a risk to the CAD outlook for H2 FY2024,' she added.

Federation of Indian Export Organisations (FIEO) president A Sakthivel said in order to boost the economy there is a need to provide further momentum through easy and low cost of credit to MSMEs, marketing support to promoting overall exports, and GST exemption on freight on exports.

'Also, the interest equalisation support across all sectors of export and providing further extension to the Emergency Credit Line Guarantee Scheme by one more year till March 31, 2024, will provide much-needed cushion during these challenging times. The trade and industry would like to see important FTAs with UK and EU, to see the light of the day to further provide much needed boost to the sector,' he said.

hindustantimes.com

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