After India banned the export of wheat and broken rice, and in light of the ongoing Russia-Ukraine war that has impacted global trade, there is a perception that there is a decline in exports from India which will have a negative effect on the Indian economy. There were concerns about the reduced growth rates in exports to Europe and USA, as the western countries are still facing supply chain problems that emerged during the Covid-19 pandemic. But despite such factors, Indian exports have shown healthy growth.
In spite of a prolonged Russia-Ukraine conflict, the disruptions in the supply chain, high inflation rates and demand slowdown in some of the major economies, the Indian exports of merchandise have held well to register 17.7% growth in April-August this year, against the corresponding period last year. Overall export, both merchandise and services, grew by 19.7% in that period.
The amount of merchandise exported was $ 164.44 billion in April-August 2022, and the export of services was valued at $260.46 billion. However, India continued negative trade balance due to higher imports, which stood at (-)$11.42 billion.
For the month of August only, the export grew from $53.83 billion in August 2021 to $57.47 billion in August 2022, registering a growth rate of 6.75%. Among these, merchandise export grew by 1.62%, while services grew by 15.12%.
The electronics sector continued to achieve impressive growth, as export of electronics showed positive growth with a 54.7% increase in the period April to August compared to the same period last year.
Exports of tobacco products showed the highest growth in August, which grew from $72.29 million in August 2021 to $127.51 million in August 2022, growing by 76.39%. Similarly, Oil Meals grew by 73.68% YoY for August.
India’s agricultural exports too have been doing well with marine products registering a growth of 7.6%, meat and dairy products registering a growth of 13.6%, fruits and vegetables exports grew by 8.8%, cereal preparations and processed food products grew by 30.6%, coffee registered a growth of 36.7%.
However, exports of some of the products have come down in the same period. Some of the sectors that have seen a dip are cotton yarns/fabrics/made-ups where exports have declined by 32%, in iron-ore exports have declined by 90% and in handicrafts there has been a decline by 36%. But the drop in exports in cotton yarn and iron ore has contributed to meeting the domestic demands and has helped domestic manufacturing.
The country’s exports have also been successful in diversifying their exports from the traditional economies to non-traditional countries, such as Indonesia (37.8% growth), Brazil (64.6% growth), South Africa (52.4% growth), Australia (31.6% growth), France (38.9% growth). This gives the confidence that Indian exports will sustain the momentum that it had gathered in 2021-22.
The Indian government is confident of the fundamentals of the Indian economy being in a very strong position and its ability to tackle global headwinds, if any, a source in the government said. The country has seen a sustained improvement in demand conditions boosting new order intakes and this has pushed output growth to the second highest in 9 months.
The S&P Global India Manufacturing Purchasing Managers Index (PMI) has signalled a strong sentiment toward India’s manufacturing growth. The survey by S&P shows that factory orders rose at the quickest pace since last November, boosted by strengthening demand conditions, new client wings and advertising.
This sentiment has been supported by GST collections that rose 28% year on year to around Rs.1.43 lakh crores in August. This suggests a pickup in economic activity as well as the success of the GST Council in improving compliance. In the first quarter of the current financial year, The GDP has grown by 13.5% which has been the fastest in a year. The numbers suggest that the country is well on track to achieve a 7.5% GDP growth which has been estimated by many agencies.
