Exports climb 10.3% reversing 5-month slowdown

Exports climb 10.3% reversing 5-month slowdown

India’s merchandise Exports grew 10.3% year-on-year to $23.8 billion in August, reversing a declining trend witnessed for five straight months, data released by the Commerce Ministry on Friday showed. The jump in shipments was driven mainly by engineering goods, petroleum products and chemicals as well as an improvement in demand in overseas markets.

GST challenges flagged

However, the Federation of Indian Export Organisations (FIEO) said it was worried about future growth as the order booking position from October was not encouraging — owing to rising global uncertainties, rupee volatility and challenges on the domestic front including those stemming from the Goods and Services Tax (GST).

ExportsWhile 26 out of 30 major product groups were in positive growth territory in August, labour intensive sectors such as gems and jewellery, leather, apparel and handicraft either posted negative growth or modest growth, which is a worrisome sign, said G. K. Gupta, president of FIEO, the apex body for the country’s exporters.

Mr. Gupta said in a statement that “exporters have stopped taking orders with least or no working capital at their disposal due to blockage of funds under GST and uncertainties looming large on refunds for the months of July to October.” He called for an in-depth sectoral analysis to pinpoint factors responsible for decline in such sectors to help all employment generating, small and micro exporters.

T. S. Bhasin, chairman of the country’s apex body for engineering exports, EEPC India, said in a statement: “A pick up in exports during August augurs well for the Indian exporters who seem to be benefiting from recovery in major global markets, including the key economies of the U.S. and Europe.”

He further stated, “Our export performance can be further enhanced if problems arising out of the GST regime implementation are addressed, as that would improve competitiveness of the Indian shipments. It is time to make the best out of the global pick up in economy, more so, when our domestic economy is showing signs of low demand and slow investment.”

Meanwhile, goods imports grew 21.02% during August to $35.46 billion. This resulted in the trade deficit widening to $11.6 billion, from $7.7 billion in August 2016. However, the shortfall was lower than the $11.45 billion seen in July.

August data was in continuance with the positive growth exhibited by goods exports since September 2016. While their performance has been staying in the positive growth territory for the previous 11 months, what gave a greater relief to the exporting community was that the 10.3% growth in August had reversed the trend of a fall in growth for five consecutive months since 27.6% in March – down to a minuscule 3.9% in July mainly due to the weakness in many labour-intensive segments.

In August 2017, the major commodity groups of exports showing positive growth over the corresponding month of last year were — engineering goods (19.53%), petroleum products (36.56%), organic and inorganic chemicals (32.41%), drugs and pharmaceuticals (4.21%), and ready-made garments of all textiles (0.56%). Non-petroleum and non gems & jewelry exports rose 14.47% to $17.74 billion, the Commerce Ministry said. Major commodity group of imports showing high growth in August 2017 were — petroleum, crude & products (14.22%), electronic goods (27.44%), machinery, electrical & non-electrical (18.35%), gold (68.90%) and pearls, precious & semi-precious stones (30.88%). Oil imports during August jumped 14.22% to $7.75 billion, while non-oil imports during the month rose 23.07% to $27.7 billion.

Goods exports during April-August 2017-18 increased by 8.57% to $118.57 billion, while imports for the same period grew 26.63% to $181.71 billion. Trade deficit during April-August was $63.1 billion almost double the $34.3 billion in the corresponding period of the last fiscal.