Exports expand in Feb despite pandemic threat
NEW DELHI : After contracting for six consecutive months, India’s merchandise exports turned positive in February, along with merchandise imports, even as the Covid-19 pandemic threatens to derail the recovery process.
Data released by the commerce ministry on Friday showed exports grew 2.9%, while imports picked up 2.5% during the month, leading to a lower trade deficit at $9.8 billion.
Out of the 30 major items, each, in India’s export and import baskets, 16 export items and 14 imported goods witnessed expansion.
While exports of pharmaceuticals (8.33%), chemicals (16.3%), engineering goods (8.7%), electronic goods (37%), petroleum (10.1%) picked up in February, shipments of gems and jewellery (-20.1%) and ready-made garments (-4.5%) contracted.
Among major imports, petroleum products (14.3%), plastic material (0.45%), precious stones (13.2%), non-ferrous metal (6.8%), machinery (9%) and transport equipment (6.1%), grew at a robust pace, while iron and steel (-26.2%), chemicals (-14.7%) and electronic goods (-6.7%) contracted. Aditi Nayar, principal economist, Icra Ltd, said the turnaround in non-oil exports and the modest growth of 2% is encouraging. “However, the impact of the coronavirus on supply chains may well result in a contraction in exports in the ongoing month. Nevertheless, the merchandise trade deficit is expected to narrow sharply in March, following the plunge in crude oil prices,” she added.
India’s current account deficit almost got wiped out in the December quarter standing at just $1.4 billion, or 0.2% of the gross domestic product (GDP) due to lower trade deficit and a rise in net services receipts, according to data released by the Reserve Bank of India on Thursday. Experts believe it could turn positive in the coming quarters due to the sharp decline in crude oil prices.
Separately, the Cabinet on Friday cleared the Scheme for Remission of Duties and Taxes on Exported Products (RoDTEP), a scheme for exporters to get local tax reimbursements, which was announced in the budget.
The scheme which will gradually replace the existing Merchandise Exports from India Scheme (MEIS) is compatible with World Trade Organisation (WTO) rules.
India had earlier lost the case filed by the US at WTO against its export subsidy schemes, including the MEIS, on grounds that they were incompatible with multilateral rules.
Under existing rules, so-called least-developed countries and developing countries whose gross national income (GNI) per capita is below $1,000 a year at the 1990 exchange rate are allowed to provide export incentives to any sector that has a share below 3.25% in global exports.