Exports fall for 15th straight month, down 5.7% in Feb

Non-gold non oil imports show some revival in industrial activity

India’s merchandise exports fell for the 15th straight month by 5.7 per cent to $20.7 billion in February this year, against $22 billion in February 2015, according to data released by the commerce ministry on Tuesday. Compared to this, during the 2008-09 global financial meltdown, the decline was for nine months on the trot.

The rate of decline in February, however, decelerated from 13.60 per cent in January and was, in fact, the second lowest since the outbound shipments started contracting since December 2014. It was in the last month of 2014 that exports had declined 3.77 per cent.

However, experts cautioned that the small fall in February was no indication of any revival in exports as global conditions were sluggish and commodity prices depressed. They don’t see revival happening before the last quarter of 2016.

The country exported goods worth $238 billion during the first  11 months of FY16, 16.7 per cent lower than $286 billion during the corresponding period of the previous year. The government had earlier set a $300 billion export target for 2015-16, but Commerce Secretary Rita Teaotia recently said such a target needed to be revised downwards to $260 billion. As much as $22 billion worth of goods need to be exported in March to meet even the truncated target. If this target is met, it would be almost $50 billion lower than the previous year’s realisation and contraction for the second year in a row.

Besides a global slowdown, the severe fall is attributed to a decline in global commodity prices. China also posted the steepest fall of around 25 per cent in merchandise exports in February since May 2009.

Imports, too, declined five per cent to $27.3 billion in February, compared to the year-ago period, when it was $28.7 billion.

The oil import bill dropped 29 per cent in February to $4.76 billion, following global cues of plunging crude oil prices. Compared to this, $6.10 billion was the comparative cost a year-ago.

As such, non-oil imports in February this year were estimated at $22.5 billion, which was 0.47 per cent lower than non-oil imports of $22.6 billion in February last year.

Gold imports declined 29.5 per cent to $1.4 billion, down from $1.9 billion a year-ago. As such, non-oil, non-gold imports, taken as a proxy for indicator of industrial demand in an economy, rose 1.9 per cent to $21.1 billion in February this year from $20.7 billion a year-ago. This might mean a small industrial recovery in February after three months of continuous decline in the index of industrial production. Non-oil, non-gold imports went down 7.43 per cent in January, much more than the two per cent registered in December.

Trade deficit narrowed to $6.6 billion in February this year, compared to $7.6 billion in January.

The cumulative imports till February FY16 stood at $351 billion, a 14.7 per cent drop from $412 billion a year-ago, which was the cumulative figure for the same period last year.

As a result, trade deficit narrowed to $113 billion for the first 11 months of FY16, compared to $126 billion in the year-ago period. This will augur well for the current account deficit.