The government is expected to release the trade statistics tomorrow, which will show how India fared on the trade front in the first nine months of FY20.
Even as the Narendra-Modi led government aimed to boost exports with its flagship scheme ‘Make in India’, the country’s exports succumbed to the prolonged slowdown in the current fiscal year. The government is expected to release the trade statistics for December month tomorrow, which will show how India fared on the trade front in the first nine months of FY20. However, much damage has already been done as India’s merchandise exports have contracted by around 2 per cent on-year till November, which rose by 10.9 per cent in the corresponding period of the previous year. Even imports suffered a contraction of 5.3 per cent in the same duration, driven by subdued factory demand.
The projections for India’s exports in the near term is also not much optimistic. “With global growth and trade projected to slow down further, India’s exports could face challenging demand conditions going forward,” RBI said in its financial stability report.
Non-petroleum and non-gems and jewellery exports in April-November FY20 increased by 0.17 per cent, while India’s largest import component, oil imports fell by nearly 13 per cent, according to the Ministry of Commerce & Industry. Also, the cumulative value of imports for the same duration contracted by 8.91 per cent. Low imports, driven by low demand in the market, has kept the trade deficit benign. Taking merchandise and services together, the overall trade deficit for April-November FY is estimated at USD 54.06 billion, compared to USD 82.47 billion in the same duration a year ago.
Meanwhile, the export credit, which is a government financial support to direct financing, guarantees, insurance or interest rate support to foreign buyers to assist in the financing of the purchase of goods from national exporters, has also fallen by a huge margin. Export credit contracted 15.1 per cent in the financial year so far and 28.7 per cent in the calendar year 2019, according to RBI.