April exports touch five-month high

Up 5.3% in April, driven by engineering, pharma; imports down 15% on contraction in gold; trade deficit falls 43%

After two months of contraction, merchandise exports rose at a five-month high of 5.3 per cent in April to $25.6 billion, against $24.35 billion in the same month last year, showed official data released on Friday.

Imports, on the other hand, were down were down 15 per cent to $35.7 billion in the month compared to $42.02 billion a year ago. This left trade deficit lower by 42.9 per cent at $10.1 billion in April against $17.7 billion a year before.

This would augur well for the already falling current account deficit and help ease pressure on  the  rupee.  

The outbound shipments were driven by high-value engineering goods, drugs and pharmaceuticals, and some textile products. Exports of engineering products, which displaced petroleum products as the top  most outbound  shipment item, rose 21.3 per cent to $5.7 billion, while pharma were up 10.4 per cent to $1.3 billion. Besides, marine products increased 42.2 per cent, ceramic and glassware grew by 32 per cent and leather products 30.4 per cent. In textiles, readymade garments rose 14.3 per cent.

However, exports of petroleum products were up only 0.7 per cent to $5.15 billion. Gems and jewellery, facing rough weather because of curbs on gold and silver imports, contracted 8.1 per cent to $3.3 billion. Exports of iron ore, still facing various prohibitions, rose 23.4 per cent, albeit at a low level of $152 million.

While oil imports fell only 0.6 per cent to nearly $13 billion over $13.05 billion, non-oil imports fell 21.5 per cent to $22.7 billion, a large part of which came from the contraction in gold and silver imports. Gold imports fell 74 per cent, reaching $1.75 billion, over $6.8 billion earlier. Silver contracted 26 per cent to $467.6 million as against $636.6 million in the same month a year before. Non-oil, non-gold imports declined 3.9 per cent to $20.5 billion in April against $21.35 billion in the same month a year before, showing industrial sluggishness still there in the economy.

Project goods fell 14.8 per cent to $343 million against $402 million earlier, reflecting the downturn still in industry. Transport equipment and machinery moved down by 38.3 per cent and six per cent, respectively. Exporters believe the rise in in April was because of a rise in demand in the US and the European Union.

According to a report by YES Bank, the situation in the US and the globe in general will improve once short-term problems related to the weather fade away. That will prove beneficial for our merchandise export.

Part of the export rise was also due to a base effect, “related to higher shipments in February-March 2013, prior to the expiry of various export incentives in March 2013. Merchandise exports are expected to continue to record positive growth in the ongoing quarter, benefiting from healthy global demand and a stable rupee,” said Aditi Nayar, senior economist, ICRA.

The International Monetary Fund estimated US economic growth at 2.8 per cent in 2014 against 1.9 per cent in 2013. The euro area is projected to expand 1.2 per cent in 2014 against a contraction of 0.5 per cent in 2013.

However, exporters still demand a priority sector tag.

“Exports should be brought under priority sector lending for credit availability to the sector, with international benchmark rates. Availability of electricity for MSME (medium, small and micro enterprises) manufacturing, with concessional rates, is the need of the hour. Similarly, extra efforts are required on the marketing front of Indian products globally,” said M Rafeeque Ahmed, president, Federation of Indian Export Organisations.