Merchandise exports increased 45 percent year over year in August, and over 27 percent year over year (the same month in FY20), boosted by an economic rebound in advanced countries and higher global commodity prices.
Imports also increased by nearly 51% year over year and 18% from pre-Covid levels, indicating a larger trade recovery. For the sixth month in a row, goods exports have surpassed the pre-Covid level. In August, exports totalled $33.1 billion, while imports totalled $47 billion. As a result of the higher imports, the trade deficit reached a four-month high of $13.9 billion.
Outbound exports in the first five months of this fiscal year totalled about $164 billion, up 67 percent year over year and 23 percent from the same period last year. BVR Subrahmanyam, the Commerce Secretary, expressed optimism that, based on the country’s strong development so far, it will meet its ambitious $400 billion export objective for FY22. Due to the Covid epidemic, India was only able to export commodities valued at $291 billion last fiscal year.
Of all, as analysts have pointed out, export growth had been slow even before the epidemic – outbound shipments increased by 9% in 2018-19 but fell by 5% in 2019-20. As a result, only a sustained rise over the next few years will allow India to reclaim its former glory.
Importantly, core exports (excluding petroleum and gems and jewellery) increased by 32% year over year in August, lagging behind the 45 percent increase in overall merchandise exports, owing to a rise in global crude oil prices and a rebound in gems and jewellery exports following a setback last year. Despite the supply issues faced by Covid, the increase remains optimistic.
Similarly, core imports increased 3 percent year over year and 34 percent from August 2019. Overall, goods imports totalled $220 billion in April-August, increasing 82 percent from a year ago but only 4% higher than in 2019.
Outbound shipments of petroleum products increased by 140 percent in August, while gems and jewellery increased by 88 percent, engineering items increased by 59 percent, cotton yarn, textiles, made-ups, and handloom products increased by 56 percent, and electronics increased by 31 percent. In August, imports of iron and steel increased by 108 percent, followed by pearls, precious and semi-precious stones (93 percent), gold (82 percent), and gasoline (82 percent) (80 percent ).
Many labour-intensive sectors were big contributors to the strong performance, according to A Sakthivel, president of the FIEO, which is a good sign because it will help create more jobs. However, imports totalling $47 billion in August, up 51% year on year, should be scrutinized, he added.
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