A revival in global demand has seen exports of engineering goods and gems and jewellery surge. Exports in April rose 196% compared to 2020 and 17% when compared to 2019.
A revival in global demand has seen India’s exports surge in April with segments like gems and jewellery and engineering goods seeing a sharp increase during the month.
A close look at trade data available with the Ministry of Commerce and Industry shows that exports in April increased not only in comparison to April 2020 — when exports had slumped due to the nationwide lockdown — but also when compared to exports in April 2019.
Exporters say the surge is continuing in the first couple of weeks of May as well but lockdowns across states are now impacting manufacturing and logistics.
Exports in April rose 196 per cent when compared to 2020 and by 17 per cent when compared to 2019.
“Exports are growing even when compared to 2019. The trend is continuing in May as well. Indian exporters are flushed with orders and the export order booking position is looking good,” said Ajai Sahai, director general and chief executive of Federation of Indian Export Organisations (FIEO).
“The value of India’s exports has also increased as prices of many inputs and raw materials have increased in many of the metal sectors,” Sahai said, adding that India is doing well in exports of raw materials and semi-finished items in segments like steel, plastics and chemicals.
What is India exporting?
Engineering goods, constituting 26 per cent of India’s total exports, grew 238 per cent over last year and 18 per cent over 2019 to $7.9 billion (around 56,000 crore).
Gems and jewellery, constituting 11 per cent of India’s exports, grew 9300 per cent over last year, and 17 per cent over 2019.
Drugs and pharmaceuticals, cotton yarn, fabrics and handlooms, electronic goods, plastics and rice are some of the other export items that are growing in comparison to last year.
With the pace of vaccinations picking up in global economies, the threat of the Covid-19 pandemic has receded prompting many advanced countries to gradually open up their economies.
Mahesh Desai, chairman, Engineering Export Promotion Council of India said exports of items like medical equipment, industrial machinery and automobile parts are looking promising.
“The order books are so far looking promising. The first week of May showed good exports,” he said.
Biswajit Dhar, a professor at Jawaharlal Nehru University, said India’s export markets are reviving leading to a surge in exports.
“The global economy is rebounding quickly. And this is being reflected in the growth in exports. For instance, gems and jewellery, a segment dependent on consumer demand and incomes of people, has seen a sharp increase. Similarly, the increase in engineering goods is dominated by light engineering goods like non-electrical machinery and is commensurate with global revival,” Dhar said.
“Lot of infrastructure investment is taking place across the world and that also explains the surge in demand for many exports,” Dhar said.
“The surge in exports will continue for at least the next few months. And this is good news for Indian companies as domestic demand has slumped completely. The foreign demand will come in handy and encourage firms to invest to build additional capacity. India’s trade to GDP ratio has been coming down over the last few years but this trend is changing now,” he added.
New restrictions not good news for exports
The demand for exports in continuing but lockdown restrictions in May is impacting manufacturing and leading to logistics disruptions and this is likely to hit exports, exporters said.
“Only continuous process manufacturing is being allowed in many states. On paper, there is no restriction on movement of goods but the disruption is obvious in the supply chain,” Sahai said.
In a report dated 18 May, Care Ratings flagged the restrictive measures imposed across several states and how its impact on the manufacturing activities posed a threat to the recovery of textile exports.
Desai said the government needs to take steps to protect exports. “With lockdowns, production has come to a standstill. Lockdowns are leading to logistics, inventory and finance problems. Export oriented units and hubs should be categorized as ‘essential services’ so that production can be carried out without any disruptions,” he said.
Source: The Print