Slowing economy: Country’s exports dip 3rd time this year

Exports dip 6.57%; import contracts 13.58%, narrowing trade deficit to $10.86 billion

India's merchandise exports in September declined for the third time in the current financial year, while imports dropped for the fourth consecutive month, signaling that rising protectionism and continuing trade tensions between the US and China along with the spectre of a global slowdown are impacting India's trade prospects as well.

Data released by the Commerce Ministry showed India's merchandise exports declined 6.57% to $26.03 billion in September 2019 from $27.87 billion in September 2018 while imports in the month dropped 13.85% to $36.89 billion from $42.82 billion in September 2018.

Despite the overall sluggish export performance, sectors such as electronic goods, spices, minerals and ores, ceramic products, drug and pharmaceuticals recorded positive growth in September.

Shipments of gems and jewellery, engineering goods, petroleum products, handloom and leather goods, cereals, meat and dairy products recorded negative growth, according to the data.

"Declining trend in exports does not augur well for the overall growth of the economy. Escalating trade tensions that have unsettled the slowing world economy have also led WTO to sharply cut their trade forecasts for both 2019 and 2020 to 1.2 and 2.7 respectively. The downside risks still remain high in the global economy and the projection for 2020 depends on a return to more normal trade relations," said FIEO President Sharad Kumar Saraf.

The problem for India's exports has assumed serious proportions as only eight out of 30 major product groups showed positive growth in September 2019. All major sectors including almost all labour-intensive sector of exports besides petroleum were in the negative, showing such a decelerating trend.

"Exports continue to remain amongst the weakest links of the economy. The situation is aggravated by worsening global trade, making it essential for the government to intervene effectively to make Indian exports competitive. Rising raw material prices and lack of low cost credit need to be tackled," said EEPC India Chairman Ravi Sehgal.

As per the Commerce Ministry data, amidst the sluggish trade performance in the month of September, the country's trade deficit shrunk during the month under review to $10.86 billion dollars from $14.95 billion in the year ago period. The drop has largely been on account of sharp fall in imports relative to exports.

Imports during September showed negative growth in almost all major sectors including coal, petroleum products, crude precious and semi-precious stones, chemicals and electronic goods. Oil imports were $8.98 billion, which was 18.33% lower against last year.