The Indian exports face bigger threat from the Asia-Pacific (APAC) region than from the imminent slowdown in the West, said rating agency CRISIL on Monday.
Citing data from the Ministry of Commerce and Industry, the agency said that during April and May, the decline in Indian exports was the sharpest in the APAC region as compared to the USA, Africa, European Union, and the Gulf region.
As per the reports, during the two months, India’s exports declined 11.4 per cent. Comparatively, exports to APAC were down 21.8 per cent. The USA and Africa followed APAC with a fall of 12.9 per cent and 8.6 per cent respectively. The fall in exports in the EU was 6 per cent. In the Gulf countries, it was 3.4 per cent. Moreover, exports of 40 of 75 commodities declined during April and May.
According to the latest data released by the ministry, India’s merchandise exports contacted by 22 per cent to USD 32.9 billion in June as compared to the month last year. Indian exports have now fallen for five straight months.
“What is worrisome is that while India’s exports to APAC are faltering, imports from the region continue to rise. This has considerably widened the country’s trade deficit with the region and overall in the past two years,” CRISIL said.
It added that while China remains the primary contributor to the country’s trade deficit from the APAC region, the trade deficit with the APAC (ex-China) region is also rising.
However, it also said that the role of China in India’s falling exports is less pronounced as compared to the other countries.
The rating agency said that the share of the US and the EU in India’s goods exports has been on the rise since 2021. It is eating into the share of the APAC region.