Exports fall for 16th straight month, down 5.5% in March

FY16 witnesses second year of contraction at $261 billion- a five-year low

India’s merchandise exports fell for the 16th consecutive month in March 2016, year-on-year (y-o-y), due to muted global demand. The decline was 5.5 per cent in March, compared to 5.6 per cent in February. In March, the rate of fall was the second lowest after the outbound shipments started contracting in December 2014.

The cumulative exports for FY16, under watch for the past few months, stood at $261 billion — a five-year low. The figure was $310-billion in the previous financial year, according to the figures released by the commerce department on Monday. Exports had declined in FY15, too.

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The cumulative export target, initially set by the government at $300 billion, was revised downwards to $260-270 billion last month after merchandise trade remained negative throughout the year. Exports had last recorded growth in November 2014, rising 7.2 per cent y-o-y.

The current trend of contraction becomes stark when compared with the 2008-09 financial crisis, when the decline in exports was only for nine months in a row.

Exports declined to $22.7 billion in March 2016 against $24 billion in March 2015. The rate of decline, however, continued to fall from November 2015 when it had reached a peak 24 per cent.

Besides a global slowdown, the fall is attributed to global factors such as decline in commodity prices and sluggishness in the Chinese economy, among others.  The commerce ministry, however, maintained that the trend of falling exports was in tandem with other major world economies. “The growth in exports has fallen for the US (10.8 per cent), European Union (7.4 per cent), China (11.4 per cent), and Japan (12.8 per cent) for January 2016 over the corresponding period of the previous year according to World Trade Organization statistics,” it said.

However, China’s exports rose the most in a year in March at 11.5 per cent.  India’s imports, too, declined 22 per cent to $28 billion in March 2016, compared to the year-ago period, when it was $35 billion. For 2015-2016, the cumulative imports were more than $379 billion. The levels of exports are the lowest since 2010-11, when exports and imports stood at $246 billion and $351 billion, respectively. In March, crude oil import declined 35.5 per cent to $4.8 billion,  compared to $7.5 billion a year ago.

As such, non-oil and non-gold imports, taken as a proxy for industrial demand in an economy, declined 4.4 per cent to $22 billion in March this year from $23 billion a year ago.

The trade deficit narrowed for the third straight month in March to $5 billion, the lowest in five years.