January exports rise by 3%, despite Red Sea crisis; Trade deficit narrows marginally: FIEO

NEW DELHI : Responding to January, 2024 trade data especially exports which rose by 3 percent US$ 36.92 billion, Mr Israr Ahmed, President (Officiate), FIEO said that the increase in exports despite the Red Sea crisis posing challenge on the logistics front, goes to show not only the resilience of the sector but also of the exporting community, who have continuously been braving such odds since Russia-Ukraine war. The exporters have consistently been performing, driving the growth of exports, and also adding to the growth momentum of the economy.

Mr Ahmed added that though the Imports rose by about 3 per cent year-on-year to US$ 54.41 billion in January this year, the trade deficit in January, 2024 stood at US$ 17.49 billion. Main growth drivers of merchandise exports during the month included Petroleum Products, Engineering Goods, Iron Ore, Electronic Goods, Drugs & Pharmaceuticals, which is itself is a good sign as most of these sectors are labour-intensive sectors giving boost to employment creation in the country, said Mr Israr Ahmed.

FIEO Chief further added that though during April-January this financial year, exports marginally dipped by 4.89 per cent to US$ 353.92 billion but our Imports dependence reduced by 6.71 per cent to US$ 561.12 billion. Mr Ahmed further reiterated that recent tensions in West Asia especially the threat for consignments routing through the Red Sea has further added to woes of the exporting community, as the freight rates have gone up unimaginably high, with further burden of various surcharge, pushing Indian exporters to hold back around 25% of the outbound shipments transiting through the Red Sea, which added to the sense of scepticism and nervousness among the businesses and markets across the world. Mr Israr Ahmed also raised concern that much will depend on the new agreement to be signed with buyers during the new fiscal as the exporters have been absorbing the burden of increased freight cost as per the old agreement.

FIEO President therefore reiterated that the need of the hour is to address the Red Sea crisis challenges by ensuring availability of marine insurance, regular supply of containers, and rationale increase in freight charges. The sector also needs easy & low cost of credit, marketing support, besides conclusion of some of the key FTAs with UK, Oman and EU soon. However, Mr Ahmed is optimistic that the FY 2023-24 exports will cross last year’s figures.