Growth in India’s merchandise exports in September after a gap of six months could not be sustained in October with outbound shipments contracting 5.4% as many of the European markets imposed fresh lockdown measures as a second wave of coronavirus pandemic gripped the continent.
Exports fell to $24.8 billion, while imports contracted 11.6% to $33.6 billion, resulting in a trade deficit of $8.8 billion, according to preliminary data released by the commerce ministry.
India’s merchandise trade was weakening even before the covid-19 outbreak due to declining external demand. In 14 of the past 16 months, starting June 2019, the country’s exports were in the negative. Since March 2020, both exports and imports started falling in high double digits, temporarily leading to a trade surplus in June for the first time in 18 years.
Data compiled by the World Trade Organization (WTO) showed global merchandise trade declined by 21% in the June quarter. According to the WTO, global volumes of merchandise trade is set to decline 9.2% in 2020, followed by a 7.2% rise in 2021. In April, the trade body had projected global merchandise trade to drop by 13-32% in 2020 because of the covid-19 crisis.
Federation of Indian Export Organisations President Sharad Kumar Saraf said nominal decline in exports during October has been mainly because of the huge container shortage and hike in sea freight which has upset exports. “With the upcoming Christmas and New Year season, both the global and India economy are slated for economic revival. Exporters have continuously been receiving a lot of enquiries and orders further adding to the positive sentiments with signals of further resilience in the global supply chain,” he added.
Aditi Nayar, principal economist at ICRA Ratings said non-oil merchandise exports continued to report a growth for the second consecutive month, although the pace of the same expectedly moderated following a resurgence of Covid-19 infections in many trading partners. “The renewed lockdowns in some advanced economies will severely test the durability of the uptrend in non-oil merchandise exports in the ongoing month,” she added.
India’s economy contracted 23.9% in the June quarter, hit by the double whammy of a demand contraction and supply shock because of a countrywide lockdown, considered to be the strictest in the world to contain the spread of the novel coronavirus. The International Monetary Fund (IMF) projected India’s economy to contract 10.3% in FY21, while the Reserve Bank of India’s estimates put it at -9.5%.
