New Delhi, Oct 15 (IANS) India’s merchandise exports in September declined for the third time in the current financial year, while imports dropped for the fourth consecutive month, signaling that rising protectionism and continuing trade tensions between the US and China along with the spectre of a global slowdown are impacting India’s trade prospects as well.
Data released by the Commerce Ministry showed India’s merchandise exports declined 6.57 per cent to $26.03 billion in September 2019 from $27.87 billion in September 2018 while imports in the month dropped 13.85 per cent to $36.89 billion from $42.82 billion in September 2018.
Despite the overall sluggish export performance, sectors such as electronic goods, spices, minerals and ores, ceramic products, drug and pharmaceuticals recorded positive growth in September.
Shipments of gems and jewellery, engineering goods, petroleum products, handloom and leather goods, cereals, meat and dairy products recorded negative growth, according to the data.
“Declining trend in exports does not augur well for the overall growth of the economy. Escalating trade tensions that have unsettled the slowing world economy have also led WTO to sharply cut their trade forecasts for both 2019 and 2020 to 1.2 and 2.7 respectively. The downside risks still remain high in the global economy and the projection for 2020 depends on a return to more normal trade relations,” said FIEO President Sharad Kumar Saraf.
The problem for India’s exports has assumed serious proportions as only eight out of 30 major product groups showed positive growth in September 2019. All major sectors including almost all labour-intensive sector of exports besides petroleum were in the negative, showing such a decelerating trend.
“Exports continue to remain amongst the weakest links of the economy. The situation is aggravated by worsening global trade, making it essential for the government to intervene effectively to make Indian exports competitive. Rising raw material prices and lack of low cost credit need to be tackled,” said EEPC India Chairman Ravi Sehgal.
As per the Commerce Ministry data, amidst the sluggish trade performance in the month of September, the country’s trade deficit shrunk during the month under review to $10.86 billion dollars from $14.95 billion in the year ago period. The drop has largely been on account of sharp fall in imports relative to exports.
Imports during September showed negative growth in almost all major sectors including coal, petroleum products, crude precious and semi-precious stones, chemicals and electronic goods. Oil imports in September were $8.98 billion, which was 18.33 per cent lower, compared to $10.99 bn in corresponding period last year.
The third monthly fall in exports this year (FY20) has meant that cumulative value of exports for the period April-September 2019-20 also fell by 2.39 per cent to $159.57 billion as against $163.48 billion during April-September 2018-19.
The fall in exports for India has come at a time when Indian economy has slowed to 5 per cent level in the first quarter of FY20 and indications are that it will fall further despite government efforts to pump prime the economy through a series of stimulus measures. All major global institutions have brought down India’s growth projections. What is more worrisome that even the world economy is slowing down. The latest IMF projections put world to grow at 3 per cent in 2019 lower from its earlier projection of 3.2 per cent and a lot lower that 2018 growth of 3.6 per cent.