Sagging export volumes amid the Make in India dream
With overseas demand in the dumps, the latest trade data makes for dreary reading
It is Make in India week in Mumbai and the buzz in the city is all about getting more foreign direct investment and boosting exports. But with overseas demand in the dumps, the latest trade data makes for dreary reading. Even after accounting for lower commodity prices, and adjusting for oil and gold trade.
Take non-petroleum product exports. In January, these totalled $19.12 billion, about 10.5% down from a year ago. Several manufactured goods industries reported this decline. Engineering goods exports fell by more than a quarter, textiles by 6.1% and leather by 12.1%.
To be sure, lack of demand and deflation worldwide is one reason for this sharp fall. However, calculations by Sonal Varma and Neha Saraf, economists at Nomura Financial Advisory and Securities (India) Pvt. Ltd, show that volumes fell 0.4% in January after falling 0.2% in December.
Import data doesn’t show a better picture either. Imports of capital goods, which are usually a sign of investment demand recovery, fell in many categories. Transport equipment imports fell 21.1% and project goods fell similarly. Overall, non-oil non-gold imports, a signal for domestic demand, fell 7.5% from a year ago in January.
While this fall in imports is totally in pricing terms— that is, volume growth is still in positive territory—Nomura calculations show a weakening trend. Import volume growth in January declined to 9.5% from a year ago compared with 13.7% in December and nearly 20% in the early months of 2015. That indicates all is not well with domestic demand too.
With Reserve Bank of India (RBI) governor Raghuram Rajan resisting pressure from exporters and policymakers to devalue the rupee to support exports, all eyes turn to the Union budget to see what incentives the finance minister will announce to boost exports.
Editor's Picks »
- Artificial intelligence predictions may not always lead to better decisions
- 2G case: Delhi HC defers hearing on CBI, ED plea against acquittals
- Friday Wrap: ‘Parmanu,’ ‘Solo’ make for dull movie week
- In order to grow, we need to get into other markets: Vince Voron
- IHH extends revised offer for Fortis to 30 June
- Motherson Sumi continues to face margin pressure in foreign markets
- What the Warren Buffett indicator tells us about market valuations today
- Jet Airways lands with a thud in Q4 as fuel costs increase
- IBC amendments: Some dilutions, and a lot more speed
- Patanjali’s gambit is paying off in toothpaste wars