New Delhi: India's traditionally strong petroleum, gems and jewellery exports fell steeply in the first half of this fiscal year, hurt by slow growth in developed countries, although pharmaceutical, electronics and engineering goods bucked the trend.
While global trade remained subdued, the World Trade Organization expects it to recover gradually, and these sectors are expected to drive India’s exports during the ongoing fiscal.
Overall, India's merchandise exports rose to $213.22 billion during the first half of FY25, up 1% from $211.08 billion a year earlier, the government said on Wednesday.
Engineering goods, with about a 25% share in the export basket, grew 5.27% annually in value to $56.24 billion during H1, according to data from the ministry of commerce & industry. The export of electronic goods rose 19.74% annually to $15.64 billion, while shipments of drugs and pharmaceutical products rose 7.99% to $14.43 billion. Organic and inorganic chemicals exports rose 4.57% to $14.11 billion.
"India has made a mark in terms of its engineering products, which is almost a quarter of all the exports. So that is growing well. Organic and inorganic chemicals are growing well," commerce secretary Sunil Barthwal said recently. "Merchandise exports are one sector which has been impacted globally, However, India is doing much better than the global average."
India's trade in 2024 was influenced by global events: Houthi attacks on ships on the Red Sea that led to higher freight rates and disrupted supply chains; higher crude oil prices on account of the continuing Russia-Ukraine war; US-China trade tensions that led to more expensive value chains, and the EU's proposed carbon tax and forest regulations.
A slowdown in global growth, especially in the developed economies, further impacted exports. As a result, some traditionally strong export sectors have suffered. Exports of gems and jewellery fell 10.89% to $13.92 billion, while exports of petroleum products fell 12.48% to $36.54 billion during H1.
In April, the WTO forecast a recovery in global merchandise trade in 2024, following a weak 2023 marked by inflation and high energy prices. The WTO expects trade volumes to grow by 2.6% in 2024 and 3.3% in 2025, though geopolitical risks remain.
India’s major export destinations during H1 included the US, the UAE, the Netherlands, the UK and China.
"While India’s trade deficit in goods narrowed to a five-month low in September 2024, the trade deficit for April-September 2024-25 surged by over 24%, rising from $44.18 billion to $54.83 billion," said Manoranjan Sharma, chief economist at Infomerics Ratings and former chief economist at Canara Bank. "The evolving external sector situation needs to be monitored on a constant real-time basis and mid-course corrections effected, as and when needed."
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