Amidst global headwinds and slowdown in growth across the world India’s merchandise exports in December 2022 plummeted 12.2 per cent to USD 34.48 billion (year-on-year) from USD 39.27 billion recorded in the corresponding month of 2021. Merchandise imports in December 2022 were USD 58.24 billion, as compared to USD 60.33 billion in December 2021, reflecting a 3.46 per cent slide, maintaining the trade deficit at USD 23.76 billion for the month, Commerce Ministry data showed on Monday. Commerce Secretary Sunil Barthwal, however, highlighted the resilient growth of the Indian economy during the first half of the current financial year as the fastest among major economies, which underlines the strengthening macroeconomic stability.
The laggards on the export front were engineering shipments which declined about 12 per cent in December to USD 9.08 billion and others with negative growth in December 2022 include coffee, cashew, leather goods, pharma, carpet and handicrafts. Petroleum products exports too contracted about 27 per cent to USD 4.93 billion in December last year.
The sequential improvement in exports benefitting from the pre-holiday shipments was not enough to stave off a yoy contraction in December 2022, in light of the weak global demand, points out Aditi Nayar Chief Economist of ICRA. “Nevertheless, softness in prices of some commodities contained imports to an extent, stabilising the trade deficit around the previous month’s level, and well below the average of USD 26 billion seen in the six months ending October 2022,” said Nayar. “Exports in negative territory due to recession like situation, slowdown and rising inflation in most economies,” said A Sakthivel, President, FIEO.
The Commerce Ministry report shows India’s merchandise exports exhibited a positive yoy growth in 11 out of 30 sectors in December as compared to the same period last year and imports have increased in 17 out of 30 sectors yoy. Among the QE commodity groups, exports of iron ore grew 185.76 per cent, oil meals 53 per cent, electronic goods 36.96 per cent, other cereals 16.87 per cent, tea 15.97 per cent, rice 3.3 per cent, tobacco 13.07 per cent, ceramic products and glassware 11.6 per cent, fruits and vegetables 8.03 per cent, cereal preparations and miscellaneous processed items 4.9 per cent and ready-made garments of all textiles 1.02 per cent.
Merchandise exports for the period April-December 2022 were USD 332.76 billion as against USD 305.04 billion during the same period of 2021. Merchandise imports for the period April-December 2022 were USD 551.70 billion as against USD 441.50 billion during the April-December months of the last fiscal. The merchandise trade deficit for April-December 2022 was estimated at USD 218.94 billion as against USD 136.45 billion in the corresponding months of 2021.
Overall exports combining India’s merchandise and services in April-December 2022 were USD 568.57 billion, a growth of 16.11 per cent year-on-year over the April-December 2021 period. With India’s domestic demand remaining steady amidst the global slump, overall imports in April-December 2022 at an estimated USD 686.70 billion grew 25.55 per cent over the same period last year. As per the Ministry data, December last year has been the second highest monthly export of merchandise and services during 2021-22.
The Government attributes the 5.26 per cent yoy overall decline in export of merchandise and services of USD 61.82 billion in December 2022, to high base effect. Overall imports of USD 73.80 billion last month shows a degrowth of 1.95 per cent over the same period last year. “Global growth forecasts indicate downturn in global economic activity and trade,” said Barthwal. As per Global Composite PMI report (January 2023), according to Barthwal, export orders have been contracting for the 10th successive month in December. “The report also indicated that India and Ireland were the only nations to register growth of economic activity in December 2022, he added.
The bright spots, according to Barthwal are exports of electronic goods during the period April-December 2022 which recorded USD 16.67 billion as compared to USD 10.99 billion during the same period last year registering a whopping growth of 51.56 per cent. Exports of petroleum products in April-December 2022 was USD 70.28 billion registering a growth of 52.15 per cent over USD 46.19 billion in April-December 2021. More than USD 6 billion worth of smartphones were exported during the period April-November 2022. In the textile sector, cotton yarns exports declined because there was continuous price rise of raw materials throughout 2022 while exports of Indian textile apparels and RMG textiles got a major hit due to recessionary trend in major economies.
In other categories, the non-petroleum, non-gems and jewellery exports which comprises gold, silver and precious metals in December 2022 fell to USD 27.00 billion, from USD 29.52 billion in December 2021 while imports of the same were USD 36.93, compared to USD 35.95 billion in December 2021. Exports of this category of goods during April-December 2022 was USD 233.50 billion, as compared to USD 229.95 billion in April-December 2021 while imports of this basket were USD 330.78 billion in April-December 2022 as compared to USD 266.86 Billion in April-December 2021.
The Commerce Ministry is maintaining an outlook of cautious optimism on international trade in the last quarter of the current financial year given the cumulative growth until December 2022 and the indicators of the slowdown in global economic activity.