Exports of key commodities fall in April-July amid rising trade deficit
NEW DELHI : India’s commodities exports, including marine products, rice, gems & jewellery, and petroleum products, declined steadily between April and July 2024, with 12 of the 30 major export items dipping further in July, according to the latest data from the Ministry of Commerce and Industry.
During July, the export of commodities such as coffee (-0.98%), rice (-15.30%), cereals (-81.43%), cashews (-25.51%), oil seeds (-0.01%), marine products (-4.58%), ceramic products & glassware (-21.13%), gems & jewellery (-20.36%), organic & inorganic chemicals (-12.03%), cotton yarn & handloom products (-4.13%), jute (-14.30%) and petroleum products (-22.15%) declined in value terms from the same month last year.
However, the export of commodities such as electronics (37.31%), engineering (3.66%) and pharmaceutical products (8.36%) rose annually during July, edging out traditional export shipments of textiles, chemicals and jewellery and signalling a crucial shift in export trends.
Nine of the 30 major export items dipped in value terms annually during June, while 10 of the 30 dipped in May and 17 in April. During April-July, 12 of the 30 major export items fell in value terms from the same period last year. These included rice (-4.29%), cereals (77.18%), cashew (-19.14%), oil meals (-16.48%), oil seeds (-8.61%), marine products (-7.20%), iron-ore (-15.47%), mica, coal & other ores (-1.09%), leather & leather products (-2.05%), ceramic products & glassware (-7.82%), gems & jewellery (-7.45%), and jute (-12.50%).
Exports of the top 30 commodities stood at $31.83 billion in July, down from $32.63 billion in July 2023, the commerce ministry data showed. During April-July, exports of the top 30 commodities stood at $135.34 billion, up from $130.77 billion a year ago.
The merchandise trade deficit – the difference between the country’s exports and imports – stood at $23.5 billion in July, larger than the $20.98 billion deficit recorded in the previous month and $19 billion in July 2023.
Global economic weakness
Experts attributed the slump to global economic weakness. “Despite growing exports, the second successive month of decline in goods exports (in July) and three-quarter-high goods trade deficit show that global demand is yet to pick up meaningfully amid tepid growth and geo-economic fragmentation,” said Manoranjan Sharma, Chief Economist at Infomerics Ratings.
“This process could negatively impact the macro-economy and the domestic currency, and necessitates focused efforts to step up exports for economic growth and structural transformation,” he added.
According to a Bank of Baroda analysis, the trade deficit widened by about $10 billion during April-July from the same period of the previous year. “India’s merchandise trade deficit was higher, as imports have risen at a sharper pace than exports (both on sequential and cumulative basis). The sequential increase (in imports) is attributable to non-oil and non-gold imports, signalling resilient domestic demand,” Dipanwita Mazumdar, an economist at the Bank of Baroda, said in the report.
“Going forward, we expect some correction in the trade deficit as a revival in the export cycle cannot be ruled out. Easier monetary conditions are expected to boost demand conditions globally,” Mazumdar added.