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Merchandise exports contract by 60%, imports plunge 58% in April amid shutdown

Merchandise exports plunged 60.3% and imports fell 58.7%, causing a trade deficit of $6.8 billion, data showed.  (Photo: Bloomberg)Premium
Merchandise exports plunged 60.3% and imports fell 58.7%, causing a trade deficit of $6.8 billion, data showed. (Photo: Bloomberg)

  • Out of 30 major exporting items, only iron ore (17.5%) and pharmaceuticals (0.25%) recorded growth, while among top import items, all posted declines
  • The sharp 59.3% decline in non-oil exports was driven by engineering goods, gems and jewellery, and textiles

India’s trade basket plummeted to a record low in April as countries sealed their borders to arrest the spread of the coronavirus pandemic.

Merchandise exports plunged 60.3% and imports fell 58.7% resulting in a trade deficit of $6.8 billion, data released by the commerce ministry on Friday showed.

The sharply weaker performance in April followed a 34.6% drop in India’s merchandise exports in March when imports declined 28.7%.

A nearly two-month-long nationwide lockdown has hit India’s trade, which has been on a declining trend due to a slowing economy.

The government has been easing some of the restrictions of the lockdown, which currently runs through Sunday.

“Despite the graded relaxations in the current month, the levels of merchandise exports and imports are likely to remain subdued in May as well," said Aditi Nayar, vice- president at Icra Ratings. “However, a pause in remittances may prevent a current account surplus in Q1 FY2021."

Of the 30 major exporting items, only iron ore (17.5%) and pharmaceuticals (0.25%) recorded positive growth in April.

Among the major import items, all registered negative growth during the month.

While the contraction in non-oil imports was broad-based, two-thirds of it was concentrated in items such as gold and precious stones, electronic goods, machinery and coal.

The sharp 59.3% decline in non-oil exports was driven by engineering goods, gems and jewellery, and textiles.

Considered the severest in the world, the lockdown has led to large-scale job losses and difficulties for migrant workers.

India’s unemployment rate climbed to 27.1% in the week to 3 May before dropping to 23.97% in the following week, data from the Centre for Monitoring Indian Economy showed.

Around 121.5 million people reported job losses in April, the survey said.

The Asian Development Bank on Friday said GDP in South Asia will be lower by $142 billion to $218 billion (3.9-6%) in fiscal 2021, mainly reflecting strict coronavirus induced restrictions in countries such as Bangladesh, India and Pakistan.

The World Trade Organization (WTO) has projected global merchandise trade to drop between 13% and 32% in 2020 due to the pandemic.

“The wide range of possibilities for the predicted decline is explained by the unprecedented nature of this health crisis and the uncertainty around its precise economic impact. But World Trade Organization economists believe that the decline will likely exceed the trade slump brought on by the global financial crisis of 2008‑09," it said in April.

Ravi Sehgal, chairman of the Engineering Export Promotion Council, said while global trade, especially of essentials such as food and medicines is resuming partially, it would be a long haul before normalcy returns.

“Exporting units, especially in the engineering sectors, are largely micro, small and medium enterprises and they face an existential crisis," Sehgal said, adding that while the central government’s micro, small and medium enterprises package would provide liquidity infusion, “the units need straight forward fiscal support like waiving of electricity charges, water bills and wage support for survival."

“Besides, all dues and refunds should be immediately released to enable exporters tide over this unprecedented crisis," Sehgal said.

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