Merchandise exports and imports remained robust in April despite localized lockdowns across the country, indicating an increase in external and domestic demand for goods and leaving behind a four-month-high trade deficit of $15
Merchandise exports and imports remained robust in April despite localized lockdowns across the country, indicating an increase in external and domestic demand for goods and leaving behind a four-month-high trade deficit of $15.1 billion.
Merchandise exports rose at a record 195.7% to $30.63 billion in April while merchandise imports increased 167% to $45.7 billion, according to data released by the commerce ministry on Friday. This jump, however, comes over the low base of last year when India entered a nationwide lockdown that disrupted supply chains, impacting both imports and exports. In April 2020, India’s exports and imports stood at $10.36 billion and $17.12 billion, respectively. However, the trade performance in April this year softened sequentially from the March print. In March, exports and imports hit record highs of $34.45 billion and $48.38 billion, respectively.
Commerce secretary Anup Wadhawan said he sees a structural change that augurs well for secular improvement in India’s trade balance. “The recovery is happening in a manner such that in certain sectors we have established new markets. South-East Asia is now buying rice from us. Our pharmaceuticals exports are also far more diversified now," he said.
Non-oil, non-gems and jewellery exports registered a 160% growth in April at $23.6 billion, led by engineering, and textiles shipments, while non-oil, non-gold imports grew 130% to $28.6 billion led by electronic goods and vegetable oil.
Demand for Indian goods may rise further as vaccine coverage rises in Europe and North America, according to Engineering Export Promotion Council of India chairman Mahesh Desai.
However, the recent surge in coronavirus cases has some downside risks to growth as various state governments have imposed lockdowns and curfews to contain the second wave of the pandemic, Desai cautioned.
“This has caused a slowdown in inter-state movement of goods and has led to shortage of manpower. To address this, we urge the government to classify the export sector as an essential service," he said.
Growth in labour-intensive sectors such as gems and jewellery, handicrafts, and carpets augur well for the job scenario, which is very relevant in the current context, Federation of Indian Export Organisations president Sharad Kumar Saraf said.
Prospects for a quick recovery in world trade have improved as merchandise trade expanded more rapidly than expected in the second half of last year, the World Trade Organization (WTO) said last week. The volume of world merchandise trade is expected to increase by 8% in 2021 after having fallen 5.3% in 2020, continuing its rebound from the collapse following the coronavirus outbreak that bottomed out in the second quarter of last year, according to new estimates from the WTO.
Escalating covid cases have overwhelmed India’s healthcare system, forcing many states to announce localized lockdowns and night curfews, which are expected to delay a strong recovery in domestic economic activity. Moody’s Investors Service on Tuesday slashed its FY22 economic growth forecast for India from 13.7% estimated earlier to 9.3% now, citing a negative impact of the second wave of the covid-19 pandemic. S&P Global Ratings last week said it expects India’s gross domestic product growth at 9.8% under its moderate scenario and 8.2% under the severe scenario, based on when the infection wave peaks.
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