An improvement in external demand helped contain the decline in India’s exports, as overall merchandise exports at $34.5 billion were just 6.8% lower from the previous year, compared to double-digit declines witnessed since the start of the year.
“Green shoots in export growth appear to be stabilising, and the pessimism in July is getting converted into optimism,” said Sunil Barthwal, secretary, ministry of commerce, pointing out that even the WTO data showed that global trade was looking up, led by automobile and goods sector.
PMI Manufacturing data released earlier this month hinted to better export performance by manufacturers, with new work from Bangladesh, China, Malaysia, Singapore, Taiwan and the US.
Non-petroleum and non-gems and jewellery exports expanded for the first time, growing to $26 billion in August compared with $25.2 billion a year ago, the ministry data showed on Friday.
Engineering goods in August at $9.05 billion were, for the first time in FY24, higher than the previous year’s figure, whereas electronic goods continued to extend over their gap from last year.
“After eight consecutive months of year-on-year decline, engineering goods exports have turned positive with total shipments value registering 7.73% growth last month,” said Arun Kumar Garodia, Chairman, Engineering Exports Promotion Council India.
India exported $2.72 billion worth of electronic goods in August 2023, compared to $1.72 billion in the year-ago period.
In the first five months of the year, electronic goods exports, buoyed by smartphone exports, have been up 35% compared with the previous year. Imports of electronic goods were also up 8.5% in the April-August 2023, pointing to global value chain integration.
However, the ministry expressed concerns that the export performance may be impacted if recessionary trends in Europe get accentuated.
The European Central Bank on Thursday raised the policy rate to a record high of 4%.
Sequentially, exports held steady, even as merchandise imports increased 10.73% to $58.6 billion in August from $53 billion in July, widening the merchandise trade deficit to $24.2 billion—a ten-month high.
“With the monthly merchandise trade deficit prints averaging much higher during July-August vis-à-vis April-June 2023, India’s current account deficit is likely to widen in Q2 FY2024 from the $10-12 billion expected in Q1 FY2024,” said Aditi Nayar, chief economist, Icra.
India counted the US, UAA, Netherlands, China and the UK as top export destinations, whereas China was the largest importer for the country even as imports from the eastern neighbour declined.
Exports hold steady
-Exports at $34.5 billion, down 6.8% from last year
-The decline has slowed from double-digit increases witnessed since the start of FY24
-Higher imports lead to widening trade deficit
| ($ bn) | Exports | Imports |
| Jul-22 | 38.3 | 63.8 |
| Aug-22 | 37 | 61.9 |
| Sep-22 | 35.4 | 63.4 |
| Oct-22 | 31.6 | 57.9 |
| Nov-22 | 34.9 | 57 |
| Dec-22 | 38.1 | 61.2 |
| Jan-23 | 35.8 | 52.2 |
| Feb-23 | 37 | 53.2 |
| Mar-23 | 41.4 | 60 |
| Apr-23 | 34.7 | 50.1 |
| May-23 | 35.0 | 57.0 |
| Jun-23 | 34.4 | 53.1 |
| Jul-23 | 34.5 | 53.0 |
| Aug-23 | 34.5 | 58.6 |
| DGFT, Ministry of Commerce |
