Why are India’s slowing goods exports a cause for concern?
India’s exports declined about 16.7% in October 2022 compared with the year-earlier period. This is the first slide reported for any month since February 2021 when the globe was in the grip of the second COVID-19 wave.
Last month, imports rose at a much milder pace than earlier, likely because of softening commodity prices worldwide. Trade deficit widened by as much 50%.
Engineering goods, which have lent a strong shoulder to India’s goods exports in recent years, slid 21%. The government had set a target for FY23 at $127 billion for this sector. Which means, we ought to have exported $74 billion in April-October, but we came up short at $62.5 billion.
Engg Exports Promotion Council India Chairman Arun Garodia attributed the slowdown to high inflation in developed regions, falling demand in China, slowdown in EU, fear of a slowdown in the US and the Russia-Ukraine war.
The Commerce Ministry also pointed out that for October, $2 billion worth of exports declining was seen in steel and allied products, highlighting the fact that the government had levied an export duty on these products to help increase local availability and hence temper local prices. The government has since removed this duty.
The Ministry also highlighted that in the month of Diwali every year, workers tend to take leave, thus impacting output. It said we need to wait and watch whether the export decline was only a blip or whether this was a trend that would stay.
Electronic goods exports gave reason for cheer, being among a handful of segments to witness a rise in export growing about 38% to $1.8 billion.
Do declining imports signal trouble with our own demand? How have other exporting nations fared? Can the Indian government bet on domestic demand?
Script and presentation: K. Bharat Kumar
Videography: Johan Sathyadas
Production: Shibu Narayan
