India’s goods exports in June grew 2.55 per cent year-on-year to $35.2 billion amid continued demand recovery in key export markets such as the US and the European Union (EU) on the back of inflation easing slightly in the West. A 20 per cent jump in petroleum import bill year-on-year in June widened the trade deficit to $20.98 billion from $19.19 billion during the previous year, data released by the Commerce and Industry Ministry on Monday showed.
However, Federation of Indian Export Organisations (FIEO) president Ashwani Kumar said that exporters are going through “extraordinary logistics challenges” such as lack of container availability, shipping space, irregular shipping schedule and ships skipping Indian ports and that the exports would have recorded close to “double-digit growth” in June 2024 in the absence of these disruptions.
Media reported last month that Indian exporters are facing shortages of containers and shipping space as Chinese exporters are scrambling to ship their goods before the recently announced US tariffs on Chinese goods come into effect on August 1. The shortages have been accentuated due to the European Union’s 37.6 per cent tariffs on imports of Chinese electric vehicles that kicked in earlier this month. India is dependent on Chinese-made containers for exports.
India’s exports gained in the four out of the top five export destinations. While exports to the US jumped 6 per cent, outbound shipments jumped by 14 per cent to UAE, 6 per cent to the Netherlands, 13 per cent to the UK. However, exports to Australia that India has a mini free trade agreement (FTA) with slipped by 18 per cent.
Meanwhile, China continued to be India’s top import source followed by Russia, UAE and the US. Imports from China in June jumped 18.37 per cent compared to the previous year, 18.57 per cent from Russia and 48.15 per cent from the UAE with whom India signed an FTA in 2022. Notably, imports from Vietnam and Taiwan surged by 46 per cent and 51 per cent respectively.
“If you look at various global forecasts, there is positive global growth and inflation is also getting down. If growth sustains globally, India’s exports will also sustain. There are a lot of ifs and buts due to geopolitical conflicts. Going by the ongoing situation, we will be crossing $800 billion total exports during the current financial year. Quarterly figures are quite optimistic. Services exports are growing in a sustained manner. The major drivers of growth are engineering goods, electronic, drugs and pharmaceutical, organic and inorganic goods,” Commerce Secretary Sunil Barthwal said.
As far as sectoral trade is concerned, Spice exports jumped 11.50 per cent in June year-on-year after a decline last month affected by reports of shipment rejections. Exports in the drugs & pharmaceuticals category jumped 11.58 per cent in June, 11.93 per cent in the engineering goods category and 18.67 per cent in the electronic goods category.
Silver imports continued to register a sharp surge, up 377.37 per cent particularly from the UAE amid concerns over breach in rules of origin agreed in the FTA. Petroleum products exports, a key growth category, slipped 18.30 per cent in June compared to the previous year. Gems & jewellery exports also slipped 1.42 per cent last month.
Kumar further reiterated that there is a need to take steps on the liquidity front with deeper interest subvention support and extension of interest equalisation scheme for 5 years. “Besides addressing the Middle East geopolitical situation, Red Sea challenges by ensuring availability of containers, marine insurance and rationale increase in freight charges. The sector also needs easy & low cost of credit, marketing support and conclusion of some of the key FTAs with UK, Peru and Oman soon,” Kumar said.
Engineering Exports Promotion Council (EEPC) India Chairman Arun Kumar Garodia said, “The positive growth in exports for the second consecutive month is quite encouraging and hopefully the performance will continue despite several challenges the engineering exports sector is facing. Among the major headwinds the industry is facing are high freight rates, protectionist measures from major export partners, and muted demand in some key markets.”
