Merchandise exports fall for 18th month

Lowest rate of fall since November 2014 buoys hope of turnaround soon

India’s merchandise exports fell for an eighteenth continuous month in May. However, the rate of fall was the lowest since November 2014, when outbound trade had last grown.

Exports contracted 0.79 per cent to $22.17 billion in May, against $22.34 bn in May 2015, government data showed on Wednesday. The rate of fall has decreased for the past six months, barring April when it spiked to 6.74 per cent.

Cumulative exports for the first two months of 2016-2017 (April-May) were $42.7 bn as compared to $44.4 bn for the comparable period a year before.

Beside a global slowing, there is the decline in commodity prices and sluggishness in the Chinese economy.

During the 2008-09 global financial meltdown, the decline was for nine months in a row.

Total exports were $261 bn in 2015-16, a 15.8 per cent fall from the $310 bn of 2014-15. The government had targeted $300 bn initially but then revised this to $260-270 bn.

May also saw imports declining, by 13.2 per cent to $28.4 bn as compared to the year-ago period when it was $32.7 bn. Cumulative imports in April-May were $53.8 bn, from $65.8 bn the previous year.

Import of crude oil continued its long decline, falling by 30.5 per cent in May to $5.9 bn as compared to $8.5 bn a year before. That brought down the total trade deficit to $6.27 bn for these two months; it was $10.4 bn in the comparative period last year.

Gold imports continued to fall by a large margin for a fourth month, going down by 39.1 per cent to $1.47 bn as compared to the $2.4 bn of imports a year before. Prices of the yellow metal had fallen by 60.5 per cent in April.

Non-oil, non-gold imports, taken as a proxy for indicator of industrial demand in an economy, declined by 3.5 per cent to $21.4 bn in May, from $21.8 bn a year before. It had fallen by 17.6 per cent in April.

Major export products continued to shrink,l with petroleum products falling by 15.5 per cent, followed by drugs and pharmaceuticals (minus 14.2 per cent). However, export of engineering goods staged a comeback, rising 2.2 per cent after a long period.

“Exports are set to take off from here on and we can look for double-digit growth from October onwards,” said S C Ralhans, president of the Federation of Indian Export Organisations.

Also, gems and jewellery exports increased by 24.3 per cent, after an increase of 17.2 per cent the previous month. The one per cent excise duty imposed had seen manufacturers shutting shop in April.