China and other South-East Asian economies have become the main export destination for Indian goods with shipments to Beijing expanding 78 per cent year-on-year in June.
Trade data showed that shipments to traditional export markets such as the US, the UK and Brazil declined as restrictions because of Covid-19 and the attempt to contain the pandemic affected trade.
“India’s exports growth in a pandemic-dominated world appears to be inversely related to the rise in Covid-19 cases in its export destinations,” rating agency Crisil said, adding that this explains the reasons for growth in exports to countries such as China, Malaysia, Singapore, Vietnam, South Korea and Japan and contraction in exports to the UAE, the UK, Germany, the US, and Brazil.
India’s exports to China grew 78 per cent in June, while that to Malaysia rose 76 per cent, Vietnam by 43 per cent and Singapore by 37 per cent. “Most of these economies had flattened the Covid-19 curve in this period,” Crisil said.
India’s exports have shown a massive improvement sequentially, as the yearly contraction narrowed to -10.2 per cent in July from a severe -60.2 per cent in April, it said. In contrast, exports to western economies such as the US, Brazil, the UK, and Germany declined as they are struggling with higher Covid-19 caseloads, the report adds.
While India’s exports to the UK contracted 34 per cent in June, those for Germany declined 18 per cent and for the US by 11 per cent. The sharpest fall in exports was to the UAE, at 53.2 per cent.
“Export prospects for this fiscal will pivot on the trajectory of the pandemic across countries. It will rise to countries that have controlled their caseload and restarted activity,” the report states.
India’s exports have declined sharply since March 2020, but have recovered in June and July, contracting by only around 10-12 per cent in these two months.