India’s exports fell for the fourth straight month in June as shipments of key segments like petroleum and textiles declined but the country’s trade turned surplus for the first time in 18 years as imports dropped by a steeper 47.59 percent. Exports in value terms declined by 12.41 percent to USD 21.91 billion in June on weak global demand due to COVID-19, official data released on Wednesday showed.
The outward shipments in June, however, recovered from a steeper decline of 60.28 percent in April and 36.47 percent in May. Imports also plunged for the fourth month in a row by 47.59 percent to USD 21.11 billion in June, leaving a trade surplus of USD 0.79 billion, the first time in the last 18 years. Last time it was in January 2002 when India posted a trade surplus of USD 10 million.
Oil imports declined by 55.29 percent to USD 4.93 billion in June. Gold imports plunged 77.42 percent to USD 608.7 million. Exports sectors which recorded negative growth include gems and jewellery (-50 percent), leather (-40.5 percent), petroleum products (-31.65 percent), engineering goods (-7.5 percent), ready-made garments (RMG) of all textiles (-34.84 percent), and cashew (-27 percent).
Import segments which recorded negative growth include gold, silver, transport equipment, coal, fertiliser, machinery, and machine tools. However, exports of oilseeds, coffee, rice, tobacco, spices, pharma, and chemicals reported positive growth in June. Commenting on the numbers, Indian Oilseeds and Produce Export Promotion Council (IOPEPC) Chairman Khushwant Jain said that oilseed exports are recording growth on account of healthy output and steps taken by the government to promote shipments.
“The growth rate will continue in the coming months also. The commerce ministry is resolving all our issues,” Jain said. Mohit Singla, the Chairman of Trade Promotion Council of India (TPCI) said as the forward and backward linkages of economic activity are gradually repairing, the supply shock is fading and thus making produce readily available to meet demand.
“Many workers are returning back to work mainly in the manufacturing sector which is normalising the manufacturing activities and thus preparing the industry to meet the global demand,” Singla said. ICRA Ltd, Principal Economist Aditi Nayar said while merchandise exports charted a recovery in June, merchandise imports continued to languish, resulting in trade surplus.
“However, the underlying dynamics of this trade surplus remain unpalatable, given the implications for the strength of domestic demand. Given the delayed recovery in imports, we expect the merchandise trade deficit to shrink to around USD 10-12 billion in Q1 FY2021 from around USD 46 billion in Q1 FY2020…We expect a current account surplus of around USD 14-16 billion in Q1 FY2021,” she said.
Responding to June export figures, FIEO President Sharad Kumar Saraf said that the June figures show a trade surplus of USD 0.79 billion and last time it was in January 2002, more than 18 years back, when India had posted a trade surplus. “However, we have to analyse imports, as such a steep decline in imports may hamper the industrial recovery in the coming months. I am of the view that the focus should be on FTAs to further revive our exports and take up competition coming from smaller countries like Vietnam,” he said
During April-June 2020, exports fell by 36.71 percent to USD 51.32 billion while imports shrank by 52.43 percent to USD 60.44 billion. The trade deficit stood at USD 9.12 billion during April-June. Oil imports in April-June 2020-21 were USD 13.08 billion, 62.47 percent lower as compared to USD 34.85 billion in the same period last year.
Since 2011-12, India’s exports have been hovering at around USD 300 billion. During 2017-18, the overseas shipments grew by about 10 percent to USD 303 billion and further to USD 330.08 billion in 2018-19 and USD 314.31 billion in 2019-20.