While India aimed at substituting China’s role in exporting to major destinations, the country’s merchandise exports, on the contrary, shrank in the first seven months of the current fiscal year. India’s exports contracted by 2.2 per cent in the seven months to October 2019, according to the Ministry of Commerce & Industry. Among the top destinations in H1 FY20, exports contracted for UAE, UK, Hong Kong, Germany, Bangladesh, and Nepal. Among the principal commodities, India’s largest export is petroleum, crude and its products, plunged more than 9 per cent in the half-year.
Exports in October 2019 were USD 26.38 billion, as compared to USD26.67 billion in October 2018, showing a contraction of 1.1 per cent, while imports in October 2019 were USD 37.39 billion , which was 16.31 per cent lower over imports of USD 44.68billion. Low demand and investment in the country have kept the imports low since June 2019.
Narendra Modi-led government’s flagship scheme ‘Make in India’ was introduced to boost manufacturing, employment and exports, however, all three are staggering from the current perspective. The recent industrial production fell to an 8-year low, unemployment rose to an over 45-year high, the exports have also started to take a toll. Along with the low exports, India’s dependence on imports is another reason why the trade deficit reaches to a discomforting level. Crude oil, being the largest item in the import basket, makes India’s trade account vulnerable to movements in international prices.
India’s oil import bill rose by USD 32.3 billion during FY19. However, on the back of a major slowdown in the manufacturing sector, imports of petroleum, crude, and its products fell 31 per cent in October. Majorly driven by low petroleum imports, India’s overall imports have also shrunk by 8.4 per cent till October 2019.