India’s exports are gaining momentum and showing signs of a V-shaped recovery, while imports remain subdued with an expectation of L-shaped recovery, Maersk, the world’s number one container line, said on Thursday.
The shipping giant said that during Q22020 (April to June), the Indian containerised trade contracted by almost 30% as compared to the same period last year. Exports out of India were down by over 24% while imports suffered a greater shock with a fall of almost 34%.
Maersk said that the containerised trade has started showing signs of recovery from one of the biggest slumps in the modern times as the economies around the world started opening in a staggered manner.
According to the report, which is a combination of market intelligence and Maersk data, despite the overall drop in exports from India, commodities such as plastic & rubber have been in great demand and their exports, especially to China have seen a tremendous growth, up by 70%, during Q2 of 2020.
The plastic industry has a huge potential with the growth of end-user industries such as packaging,textile fibre and electronics. At the same time, tyre industry is one of the rare sectors which has not seen as much contraction as the others, giving a boost to the rubber exports, sources said.
Vegetable exports have also seen a rise, especially to markets in the West Asia. Vegetable exports to the UAE have more than doubled in the said period as compared to 2019. The agricultural sector is expected to grow by 3% in 2020-21 while exports are expected to grow between 4% and 6% with minimal impact of Covid-19 pandemic.
The report adds that garments & apparels exports faced a great demand-shock from the western markets during a good part of the first half of the year.
On the import side, the container data shows that imports into India witnessed a great decline across all commodities, except for chemicals which form a very small portion of overall imports. Paper, appliances, kitchenware and metal imports have slid to almost half volumes in the second quarter as compared to 2019.
Hike in import duty, import dependence on China and production stoppage across the country have hit imports in the short term. While there is an expectation of the import market to recover in 2021, it will surely be a longdrawn-out process that is further slowed down by government’s Atmanirbhar campaign, the report said.
Steve Felder, managing director, Maersk South Asia, said that it is also extremely important to reduce the cost of logistics in India which stands at 14% as compared to 9-10% in more developed countries.
“Besides digital transformation, what the logistics sector really needs is agility and reduction of inefficiencies. Supply chains are complex by nature; however, we need to simplify them by focusing on customer needs and building solutions with a straight goal of reducing complexities,” he added.