The sharp slowdown in the growth of labour-intensive exports and decline in import of critical capital goods items like project goods and machinery during the current financial year point to continuing headwinds for the broader economy.
Experts are of the view that the trend is likely to have wider ramifications for the nascent economic growth story.
An analysis of the April-December period of 2012-13, 2013-14 and 2014-15 shows that there has been a moderation in exports across most sectors. Gems and jewellery contracted 0.25 per cent during the period in 2014-15 while it had contracted 0.66 per cent in the last fiscal.
Similarly, textiles exports slowed down during the period, growing 4.2 per cent compared to 16.72 per cent in the corresponding period of 2013-14. Plantation and agriculture products also contracted by 7.73 per cent and 4.86 per cent respectively during the period.
On the import side, pearls and precious metals import declined 2.87 per cent compared to a growth of 15.38 per cent in 2013-14 while project goods declined 21.5 per cent in the current fiscal compared to a contraction of 33.5 per cent in the corresponding period last fiscal.
“Export of gems and jewellery and meat products has been negative. In fact the exports from labour-intensive sector were among the worst performing sectors in January. Leather products export and marine exports have slowed down. This is a cause of huge concern,” Ajay Sahay, president, Federation of Indian Export Organisation (Fieo) told The Indian Express.
He added that the decline in import of project goods, machinery and precious gems indicates that no “additional capacity is being created”.
“The industrial activity has not picked up and it may not pick up anytime soon given the trend in imports,” Sahay said.
Abhijit Das, head, centre for WTO studies, IIFT, said that this trend will have a bearing on the revival of manufacturing activities in India.
“While decline in raw material impacts the near futures, decline in capital goods impacts six months down the line,” Das said.
In the case of exports, during the current financial year, the most prominent study is that of gems and jewellery which, except for November when it grew over 44 per cent, has posted contraction in exports. The sector provides employment to 3.5 million people directly and indirectly, as per the GJEPC.