New Delhi, March 16:
Merchandise export growth slowed again in February to 2.4% from 3.7% in the previous month, although trade deficit narrowed to $9.60 billion from $14.73 billion in January, as imports contracted by 5.4%, the worst fall since August 2016. Exports, which grew in double digits in five of the first seven months of this fiscal, have remained subdued since November, having risen in the modest range of 0.8-3.7%.
The slowdown in export growth comes at a time when the WTO has warned of a drop in global trade growth to 3.7% this year from 3.9% in 2018, and the US has proposed to withdraw incentives on annual Indian exports of $5.6 billion.
The data also indicate while the sharp rupee depreciation may have weighed on import demand, the country’s ability to exploit the situation to boost exports is far from strong.
Exports rose to $26.67 billion in February, against $26.03 billion a year before, as a contraction in outbound shipments of products—including petroleum, gems and jewellery and certain farm items—offset a decent increase in those of electronic goods and readymade garments. Imports dropped to $36.26 billion in February from $38.34 billion a year earlier.
What could provide some solace to policy-makers is that non-petroleum and non-gems and jewellery exports in February grew 5.1% from a year before, while such imports fell 3.7%.
Even exports of meat, dairy and poultry items plunged by 24.6% in December, having already contracted by over 31% in the previous month, while marine exports declined by 7.4%.
The shipment of engineering goods, a prime driver of export growth until recently that also accounts for around a fourth of total exports, grew just 1.7% in February, while gems and jewellery exports fell 2.1%. Petroleum product exports dropped 7.7% to $3.07 billion in February, thanks to a softening oil prices.
As for imports, while brent oil prices dropped 2% in February from a year before, petroleum imports dropped at a shaper pace — 8.1%. Imports of gold dropped 10.8% to $2.58 billion and those of pearls and precious stones plunged by 17.5%.
Commenting on slower export growth, FIEO president Ganesh Kumar Gupta called for urgent support, including the issue of augmenting the flow of credit, higher tax deduction for R&D, outright exemption from GST, Online ITC refund, interest equalisation support to agri exports, benefits on sales to foreign tourists and exemption from IGST under Advance Authorisation Scheme with retrospective effect. “Besides these, budgetary support for marketing and exports related infrastructure are some of the other key issues, which needs to be looked into immediately,” he added.