India’s merchandise exports slid back into contraction mode in October as struggling global trade continued to face headwinds from the COVID-19 pandemic.
Outbound shipments declined 5.4% from a year earlier to $24.82 billion, after a brief respite in September when exports had expanded 6% to snap a six-month-long contraction.
Imports shrink
Imports of goods also declined by 11.5% last month, as per preliminary trade data released by the Commerce and Industry Ministry on Tuesday, taking the overall imports between April to October to $182.29 billion, 36.3% lower than the same period in 2019.
Merchandise exports in the first seven months of the current financial year amounted to $150.07 billion, a 19.1% contraction from the year-earlier period.
“The trade data shows the recovery is uneven and fragile as exports declined both sequentially and year-on-year, pointing to a sluggish global recovery,” said Devendra Kumar Pant, chief economist at India Ratings and Research. “The continuous decline in non-oil, non-gold imports are pointing towards very weak domestic demand,” he added.
Gems sector flounders
Exports of rice (112%), chemicals (73.9%) and drugs and pharmaceuticals (21.8%) recorded the highest growth in October, while transport equipment and petroleum products saw the sharpest declines of (–56.3%) and (-53.3%), respectively.
Among employment-intensive sectors, gems and jewellery and leather also reported contractions of (-21.3%) and (-3.8%), respectively, while export of carpets jumped almost 38% and handicrafts grew by more than 11.3%.
Calling for a deeper analysis of the reasons behind the decline in exports of major export commodities over recent months, the Federation of Indian Exporters’ Organisations (FIEO) called for “urgent and immediate” action to resolve key issues that led to October’s ‘nominal’ dip. FIEO listed a shortage of containers and an increase in sea freight charges as issues needing attention.
FIEO president Sharad Kumar Saraf also attributed part of the decline to farmers’ agitations in some States.
Urging the government to release merchandise export incentives due to businesses, Mr. Saraf said exporters were seeing a rise in orders and a further fillip was expected once the U.S. election process concludes.
