Amid the geo-political and economic headwinds across the globe, Gujarat, the largest exporting state in India, witnessed a steep decline of 15.74% in the export of commodities. According to the government data, for the period between April 2023 to August 2023 the state exported commodities worth $ 52.51 billion against the export of $ 62.32 billion for the same period last year. With more than 30% share in the total exports from the country, Gujarat is the leading exporter among 36 States and Union Territories in India.
Chemicals and Allied Products and Gems and Jewellery has been the major contributor to this downward movement of the commodity exports from the state. The export of Chemicals and Allied Products, the largest exported commodity from Gujarat, slipped to $ 31.89 billion for the first five months of FY24 against the export of $ 39.53 billion for the same period in FY23. While the export of Gems and Jewellery declined by $ 1.97 billion to $ 4.05 billion from $ 6.02 billion last year.
Bhupendra C Patel, Chairman, Basic Chemical, Cosmetics & Dyes Export Promotion Council (CHEMEXCIL), said, “The geopolitical escalations like Russia-Ukraine war have increased the energy costs that hiked the raw material costs. Increased costs of raw materials reduced the profitability of the manufacturers and they were not able to do their advance planning regarding raw materials. The war increased the costs of raw material while the finished product’s price did not increase proportionately.”
For the period between April to August in FY23, Gems and Jewellery was the second largest exported commodity from Gujarat (value vise) but in FY24 its export witnessed a steep slide of 32% and slipped to third position in all commodity exports from the state. Gems and Jewellery export has been replaced by Engineering Goods. The export of engineering goods stood at $ 5.82 billion compared to $ 5.73 billion last year. Apart from chemicals, gems and jewellery and leather, all other commodities have done reasonably well and have not seen any significant change.
Experts said that the Gems and Jewellery Industry, mainly concentrated in Surat is in trouble because of these geo-political conflicts and the economic instability in the United States of America (largest export destination for diamonds cut and polished in India) and European countries.
Leather is another commodity that witnessed significant change in trade volumes compared to the export in the previous year. The export for Leather, between the period of April to August, stood at $ 6.09 million while it was $ 3.05 million for the same period last year.
Commenting on the impact of Israel-Hamas conflict in the Middle East, Patel said, “We do not export much into that region of the world. So the impact of this conflict will not be very severe for Indian Industries. But, if this conflict continues for long then it may cause some freight problems and may result in increased freight and insurance costs. The situation at global level is not very favourable and if these issues are not resolved in time then the trade situation may not improve in the second half of the year also.”