India’s merchandise exports fell 5.4% to $24.82 billion in October

Rising coronavirus cases in key export markets dragged India’s merchandise exports in October lower by 5.4 per cent on a year-on-year basis, a data showed on Wednesday. As several of global economies being subjected to yet another lockdown, India’s trade will be further affected.

The country shipped out merchandise worth $24.82 billion from $26.23 billion exported during the like period of the previous year.

“Exports during April-October 2020-21 were $150.07 billion, exhibiting a decline of 19.05 per cent over the same period last year,” a Ministry of Commerce and Industry statement said on the basis of the data.

“In October 2020, the value of non-petroleum exports was $23.21 billion, registering a positive growth of 1.84 per cent over October 2019. The value of non-petroleum and non-gems and jewellery exports in October 2020 was $20.28 billion, as compared to $19.07 billion in October 2019, registering a positive growth of 6.34 per cent.”

Similarly, India’s merchandise imports declined by 11.56 per cent in October. The country’s imports fell to $33.6 billion from $37.99 billion reported during the corresponding period of 2019.

“India was thus a net importer in October 2020, with a trade deficit of $8.78 billion, as compared to trade deficit of $11.76 billion, an improvement by 25.34 per cent.”

Last month, oil imports declined by 38.52 per cent to $5.98 billion from $9.73 billion in October 2019.

“Non-oil imports in October 2020 were estimated at $27.62 billion, as compared to $28.26 billion in October 2019, showing a decline of 2.26 per cent,” the statement said.

“Non-oil, non-GJ (gold, silver and precious metals) imports were $22.83 billion in October 2020, recording a negative growth of 8.31 per cent, as compared to non-oil and non-gold imports of $24.9 billion in October 2019.”

Aditi Nayar, Principal Economist, ICRA said: “The preliminary trade deficit for October 2020, while largely in line with our estimates, is sharply higher than the previous month, driven by a combination of a month-on-month rise in imports and decline in exports.”

“Encouragingly, non-oil merchandise exports continued to report a growth for the second consecutive month, although the pace of the same expectedly moderated following a resurgence of Covid-19 infections in many trading partners.”

Trade Promotion Council of India’s Chairman Mohit Singla noted that spike in certain imports of items like pearls, precious and semi-precious stones are mostly used as intermediaries “or adding value to the manufacturing products”.

“High Trade deficit improvement by 25.34 per cent is a welcome sign.”

Engineering Export Promotion Council (EEPC) chief Mahesh Desai said: “We hope, it does not form a trend line in the midst of a serious second wave of coronavirus in several countries of Europe, including the UK, Germany and France.”

“With several of theste economies being subjected to yet another lockdown, we may see stormy headwinds to global trade.”

Devendra Kumar Pant, Chief Economist, India Ratings and Research said: “October trade data shows recovery is uneven and fragile. October exports declined both sequentially and yoy, pointing to sluggish global recovery.”

“Continuous decline in non-oil, non-gold imports are pointing towards very weak domestic demand. Low trade deficit implies that India will have significant accretion to forex reserve, keep rupee strong.”

Meanwhile, the Finance Ministry will soon come up with a fresh round of economic stimulus, Economic Affairs Secretary Tarun Bajaj said on Tuesday.

Addressing the media, he said that the Department of Finance has received suggestions and discussions are on in the ministry regarding the next set of measures amid the pandemic. It will be announced by Finance Minister Nirmala Sitharaman, he said.

Bajaj’s statement comes just over a week after he said that the Centre is open for further measures to boost the economy.

Last month, the finance minister said that the Centre has not closed the option for another stimulus package.

In May, the government came up with the much talked-about Rs20 lakh crore ‘Aatmanirbhar Bharat’ economic package. Both the rounds of stimulus so far have received more flak than appreciation from the industry and experts, as many are of the opinion that they are inadequate, more so in terms of boosting demand.

A recent Moody’s report said that that the second round of fiscal stimulus amounts to just 0.2 per cent of the country’s real GDP forecast for the financial year 2021 and in total, the two rounds of stimulus bring the government’s direct spending on coronavirus-related fiscal support to just around 1.2 per cent of GDP.

Separately, petrol and diesel prices may fall marginally ahead of Diwali as oil marketing companies (OMC) are looking to pass some benefit of lower global oil prices to consumers.

Sources in PSU oil companies said that a revaluation of pricing structure for petrol and diesel would be taken up this week and even if there is a case for marginal decrease prices it would be done.