India’s exports took a mighty tumble, plummeting by a jaw-dropping 22% in June, making it the sharpest decline witnessed in the past three years. The export figures, standing at a relatively meagre $32.97 billion, can be attributed to the worldwide demand slump, particularly in those lucrative Western markets like the US and Europe.
Delving into the data presented by the commerce ministry, the trade deficit in June clocked in at $20.3 billion, which is a noticeable drop from the $22.07 billion recorded during the same month last year. This slide can be attributed to both export and import reductions.
In June, inbound shipments faced a severe decline, plummeting by a steep 17.48%, settling at $53.10 billion. An alarming downturn in exports was also witnessed in May 2020 when the global economy was reeling from the impacts of the dreaded Covid-19 pandemic, resulting in a 36.47% contraction.
Commerce Secretary Sunil Barthwal chimed in, remarking on the trade figures, highlighting that the growth trajectory of the trade sector is under the influence of global factors. The World Trade Organisation’s forecast of a slowdown in world trade seems to be materializing, leaving many in awe of the accuracy of their prediction.
The reasons behind this trade growth dip, according to Barthwal, are multifaceted. There’s a discernible slowdown in major economies, especially in the US and Europe. Additionally, inflationary pressures and the tight monetary policies adopted by wealthy nations have inflicted repercussions on the manufacturing and business landscape.
Optimism, however, lingers as export promotion councils anticipate a much-needed uptick in demand in the upcoming months, particularly from July onwards.
Cumulative exports for the April-June fiscal period experienced a 15.13% decline, amounting to $102.68 billion, while imports mirrored a similar trajectory, falling by 12.67% to $160.28 billion.
Fortunately, there’s a glimmer of improvement in the trade deficit for April-June 2023, which stands at $57.6 billion, displaying a 7.9% reduction compared to the $62.6 billion recorded in the corresponding period last year.
The Ministry acknowledges that India’s trade performance, despite experiencing “very high” growth in 2022-23, has shown signs of decline, primarily due to the global slowdown’s profound impact from the previous year.
A World Bank Global Economic Prospects report for June 2023 paints a rather sombre picture of the global economy, forecasting a substantial slowing down to 2.1% in 2023, following a more promising growth rate of 3.1% in the preceding year.
Key Sector Analysis
Assessing the export landscape, it’s evident that 21 of the 30 key sectors experienced negative growth in June. These sectors include petroleum products, plastic, ready-made garments, engineering, chemicals, gems and jewellery, leather, and marine.
Oil imports in June faced a considerable contraction, plunging by 33.8% to $12.54 billion. During the April-June quarter, shipments dipped by 18.52%, culminating at $43.4 billion. Conversely, gold imports witnessed a striking 82.38% surge, reaching approximately $5 billion in June. However, during the April-June quarter, gold imports witnessed a 7.54% dip, settling at $9.7 billion.
However, there’s a silver lining with the remarkable increase of 45.36% in electronic goods exports, amounting to $2.43 billion in June. During the April-June 2023 period, electronic goods exports soared by a staggering 47% to $6.96 billion.
Silver imports suffered a crushing blow, tumbling by a staggering 94.36%, amounting to a mere $0.79 billion during the month under review.
As for imports, Russia emerged as a significant player with imports soaring to $16 billion in the April-June fiscal period, leaping from $6.91 billion during the same period last year. Similarly, imports from Switzerland rose to $5 billion in the current fiscal, marking an improvement from the $4.11 billion recorded last year.
Conversely, imports from China experienced a dip, dropping to $23.6 billion in the first quarter of this fiscal year, compared to $24.31 billion in the corresponding period of the previous year. Additionally, inbound shipments from the UAE also faced a decline, amounting to $10.31 billion in the first quarter of this fiscal year, compared to $13.55 billion in the same period in the previous year.
On the export front, India’s shipments witnessed positive growth in countries like the Netherlands, the UK, and Saudi Arabia. However, exports to China, UAE, USA, Germany, Italy, and Bangladesh experienced declines during this period, signalling fluctuations in trade patterns.
Outro
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