India’s merchandise exports declined for the sixth straight month in July with outbound shipments down 15.9% on year $ 32.25 billion. The decline in imports in July was even steeper at 17% on year to $ 52.92 billion.
In the April-July period, exports were down 14.5% to $ 136.22 billion while imports were down 13.79% to $213.2 billion.
A big part of the exports decline, government officials said, was due to the year on year fall in international prices of crude. In July of 2022 Brent crude prices were over $110 a barrel while in the same month this year it stood at $ 80 barrel. The impact of the fall was visible in both export and import figures for July.
“Commodity markets (have a role). Despite that, we are hopeful that our exports will be higher than last year in both goods as well as services,” Commerce Secretary Sunil Barthwal said.
Apart from commodity prices, another reason for year-on-year decline seen in monthly export data is the high base of last year.
If petroleum and gems and jewellery are taken out of the picture then July exports stood at $25.35 billion as compared to $ 26.89 billion in the same month of 2022.
“On a positive note, non-oil exports remained steady, even as lower oil exports dampened the overall shipments in July 2023 relative to the previous month,” Chief Economist at ICRA Aditi Nayar said.
Petroleum products exports in July declined 43.6% to $ 4.59 billion while July crude oil imports declined 36.65% to $ 11.7 billion. “In volume terms the petroleum products exports have actually grown,” Barthwal said.
The Commerce Secretary also pointed out that global headwinds are the other reason for the performance of exports as major buyers of Indian products like the US, European Union and China have reported a decline in imports. “Their imports are our exports.”
He said that the faster decline in imports cushions any pressure from fall in exports. “The worse situation would have been that exports keep declining while imports increase, widening the trade deficit.”
Other reasons for fall in exports is the conscious decision of putting restrictions on exports due to food security considerations but the trade data also points out that India is gradually becoming part of the global value chains which is visible in export and import data for electronic products.
Electronics goods exports were up 37.5% to $ 9.1 billion in April-July. Smartphones account for 53% of electronic goods exports. In April-June smartphone exports were $3.7 billion, up 125% on year.
India banned exports of wheat last year and followed up with a ban of non-basmati exports this year.
In 2022-23 merchandise exports were $ 450.9 billion while overall exports were $770.18 billion