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Home > All news > Export Import > Exports growth at 20-month high amid Red Sea crisis; impact on export renewals key monitorable, says CRISIL

Exports growth at 20-month high amid Red Sea crisis; impact on export renewals key monitorable, says CRISIL

March 21, 2024
Reading Time: 3 minutes

Mumbai - India’s merchandise exports surged 11.9 per cent on-year in February to $41.4 billion, displaying strong momentum amid the ongoing Red Sea crisis and uneven economic growth outcomes among trade partners. This has been the fastest since June 2022 after a growth of 3.1 per cent in January. With this, the exports grew for the third consecutive month, indicating sustained momentum. 

The near-term challenge to India’s exports due to the Red Sea crisis has been limited so far, however, the key monitorable going forward will be how the crisis will impact prices when export contracts are renewed, said CRISIL. Barring this hiccup, CRISIL stated, the recent healthy export momentum and forecasts by major multilateral organisations of better trade growth this year over last year are encouraging. “The current account remains in a safe zone with robust services trade surplus and healthy remittances,” it said. 

On a seasonally adjusted basis, exports grew 5.4 per cent on-month after declining 2.6 per cent in January. 

Many core export items such as pharmaceuticals, engineering goods, organic and inorganic chemicals and readymade garments recorded a surge in February, said CRISIL. Chemical exports picked up pace swiftly, growing 33 per cent on-year after recording mild growth of 0.3 per cent on-year in January and remaining in negative territory for the previous 15 consecutive months. On the whole, core (non-oil, non-gold) exports grew 17.2 per cent on-year in February compared with 2.5 per cent in January, registering the highest growth since April 2022. That said, exports of gems and jewellery remained in negative territory for the second consecutive month. 

Merchandise exports down 3.45%, merchandise imports down 5.32% in April-February period

Cumulatively, India’s merchandise exports fell 3.45 per cent on-year to $394.99 billion in the April-February period this fiscal compared with $409.11 billion a year ago. Merchandise imports grew faster than exports in February, surging 12.2 per cent on-year to $60.1 billion compared with 1 per cent the previous month.

Core imports grew 5.2 per cent on-year after declining 1.1 per cent on-year on average in the November 2023 to January 2024 period due to a sharp surge in gems & jewellery imports (94.4 per cent on-year) primarily led to a higher merchandise import bill in February. 

The merchandise trade deficit widened to $18.71 billion in February from $16.57 billion a year ago and $16.46 billion the previous month.

Cumulatively, merchandise imports contracted 5.32 per cent on-year to $620.19 billion in April-February this fiscal, helping narrow the merchandise trade deficit to $225.2 billion from $245.94 billion in the corresponding period the previous fiscal. 

India’s services exports continued to grow, rising 10.8 per cent on-year in January 2024, while imports saw mild hardening to 0.1 per cent. As a result, the services trade surplus rose to $16.17 billion in January from $13.17 billion a year ago and $15.98 billion the previous month. 

India’s export performance rebounded from August 2023 through February 2024, registering average growth of 2.7 per cent compared with a 13 per cent decline in the first four months of this fiscal (April-July 2023).

Exports and imports data highlights:

Exports of major items such as drugs and pharmaceuticals (22.2 per cent on-year in February vs 6.8 per cent in January), engineering goods (15.9 per cent), organic and inorganic chemicals (33 per cent) and readymade garments (4.9 per cent) displayed robust growth, while petroleum products (5.1 per cent vs 6.6 per cent) showed a slight slowdown. Meanwhile, exports of gems and jewellery (-11.3 per cent vs -1.3 per cent) remained in the red. 

Exports of labour-intensive sectors such as carpets (14.6 per cent v 9.4 per cent), cotton, yarn, fabrics, madeups, handloom products and others (17.1 per cent), handicrafts (87 per cent v -16.6 per cent) improved further compared with the previous month. Ceramic products and glassware (9.8 per cent), plastic and linoleum (22.1 per cent) and readymade garments (4.9 per cent) also exhibited positive growth.

Agricultural exports have gained momentum, driven by fruits and vegetables, oil seeds, rice, spices and tobacco. However, exports of cashew and oil meals slowed.

Meanwhile, oil imports turned positive, increasing 0.1 per cent on-year to $16.89 billion in February from $15.53 billion in January in line with an increase in Brent crude oil prices to $83.8 per barrel from $80.2 per barrel the previous month 

Imports of gold (133.8 per cent v 173.6 per cent) and silver (13234.4 per cent v 323.5 per cent) increased on-year. While growth in silver imports was supported by a significantly low base, the same cannot be said about gold, which faced an unfavourable base, stated CRISIL. Pearl, precious and semi-precious stones showed weak growth.

Core imports (non-oil and non-gold) rose 5.2 per cent on-year compared with a 2.3 per cent decline in January.

Import growth of industrial products such as iron and steel (9.5 per cent v -7.5 per cent) and machine tools (24.9 per cent v 0.1 per cent) was positive and strong. Coal, coke and briquettes (2.1 per cent v 21.2 per cent) saw positive, but slower growth compared with the previous month.

Disclaimer: This information has been collected through secondary research and Daily Shipping Times is not responsible for any errors in the same.

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