India’s outbound shipments rose for the first time in seven months with merchandise exports registering a 5.3% growth in September, driven by an increase in demand for engineering goods, petroleum products, drugs and garments.
Exports rose to $27.4 billion, while imports contracted 19.6% to $30.3 billion, resulting in a trade deficit of $2.9 billion, according to preliminary data released by the commerce ministry ahead of schedule.
Mint was the first to report on 25 September quoting provisional figures that exports have turned positive in the first three weeks of September, growing by 8.3%. In the six months ended 30 September, exports have declined 21.4% to $125.1 billion, while imports contracted 40.1% to $148.7 billion, creating a trade deficit of $23.6 billion.
Non-oil, non-gold exports rose 11.1%, while non-oil, non-gold imports dropped 13.3% in September.
The growth in merchandise exports is heartening, after the faltering trend seen in the previous month, said Aditi Nayar, principal economist at Icra Ratings. “Regardless, the sharp gap in non-oil, non-gold merchandise imports remains a cause of concern regarding the strength of domestic demand,” she said.
Among major countries, exports to China (20.8%) and the US (15.5%) grew at the fastest pace in September, while India’s imports from most major economies contracted, including China (10.1%).
India’s merchandise trade has been weakening even before the covid-19 pandemic hit the economy and external demand.
In 13 of the past 15 months starting June 2019, the country’s exports have been negative.
However, since March of this year, both exports and imports started declining in high double digits, even temporarily leading to a trade surplus in June for the first time in 18 years.
Data compiled by the World Trade Organisation (WTO) showed global merchandise trade declined by 21% in the June quarter.
“In comparison, the decline in merchandise trade values during the financial crisis was deeper with a 33% drop recorded in the second quarter of 2009,” it said.
In April, the trade body had projected global merchandise trade to drop by 13% to 32% in 2020 because of the pandemic.
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 imposed to contain the spread of coronavirus.