China overtakes Netherlands as India's third-largest export market

China became India's third-largest export destination in February, overtaking the Netherlands, even as overall exports declined and shipments to key markets weakened

China overtook the Netherlands to become India’s third-largest export destination in February, according to commerce department data.

 

Exports to seven of India’s top 10 destinations contracted during the month, with overall exports declining 0.81 per cent year-on-year to $36.61 billion. These 10 countries together account for over 50 per cent of India’s merchandise exports.

 

Exports to China rose 32.4 per cent to $1.67 billion in February, mainly due to a low base. While disaggregated data for the month is not yet available, recent trends suggest that growth has been driven by higher shipments in sectors such as electronics and marine products.

 

Exports to the Netherlands fell sharply by 31.3 per cent to $1.29 billion. The country serves as a key gateway for Indian goods entering Europe and has been a major destination for refined petroleum exports over the past three years. An industry expert said the decline may have contributed to the reduced shipments of refined petroleum, as India has lowered imports of Russian crude oil for refining.

 

The United States (US) continued to be India’s largest export destination, followed by the United Arab Emirates (UAE). However, exports to both countries declined in February. Shipments to the US fell nearly 13 per cent Y-o-Y to $6.89 billion, while exports to the UAE dipped marginally by 0.3 per cent to $3.25 billion. 

 

Exporters said the slight decline in shipments to the UAE is likely a oneoff. In the case of the US, the drop has been attributed to tariff-related uncertainties. Exports to the US have been more or less at the same level — between $6.3 billion and $6.9 billion — since October. The contraction can also be attributed to a relatively higher base as exports to the US surged last year in anticipation of higher tariffs.

 

“With the lowering of the US tariff to 10 per cent (from February 24), we expect exports to pick up. However, the uncertainty continues since the US has launched investigations under section 301 (b) as well targeting several countries, including India,” said Ajay Sahai, director general and chief executive officer of the Federation of Indian Export Organisations (FIEO).

 

Other countries that saw a decline in imports from India include the United Kingdom (-4.6 per cent), Saudi Arabia (-10.4 per cent), Bangladesh (-22.9 per cent), and Singapore (-13.7 per cent).

 

Meanwhile, exports to Germany and Hong Kong grew by 4 per cent and 32.1 per cent, respectively, the data showed.

 

March is expected to be a challenging month for merchandise exports due to disruptions in freight movement through the Strait of Hormuz amid the ongoing West Asia crisis. “March will be a challenging month due to the logistics bottlenecks affecting trade. As a result, exports are likely to be impacted,” Commerce Secretary Rajesh Agrawal said on Monday.