Buoyed by strong momentum, rising import demand across India's major export destinations and favorable global trade outlook, India's exports are poised to see major growth in FY22(2021-22), India Ratings & Research or Ind-Ra has said.
"A glance at the FY21 data suggests that some of the major export destinations for India’s top 10 major commodities are also the regions which are expected to witness strong import growth in 2021," Ind-Ra has said.
It pointed to the US, part of the North American market and the markets of UK, Belgium, Germany, Italy and Netherland - all major destinations of Indian merchandise - in this regard. The credit ratings and research agency said while North America is set to see major import growth to the tune of 11.4 percent, Europe is expected to witness 8.4 percent growth annually in 2021.
"India Ratings and Research (Ind-Ra) therefore believes that India’s exports, which have been languishing for quite some time, can take advantage of the favourable trade growth outlook of 2021 and consolidate its position further than what has been witnessed in the first quarter of FY22," it said.
In terms of annual growth, India’s exports grew 60.29 percent, 195.72 percent, 69.35 percent and 48.35 percent in the months of March, April, May and June 2021, respectively.
However, this was largely due to an extremely low base effect whereby annual growth calculations got skewed as India's exports in the same months of the previous year were extremely low due to the pandemic. However, the government has also pointed out that this low base effect is wearing off and for the past 2-months, export growth has been significant even compared to the same month in FY20.
"No doubt, the growth numbers reflect the depth of the COVID-19 shock last year but we believe they also show the strength of the current recovery, adequately captured by the monthly export number," Ind-Ra said. The average monthly exports during the first quarter of FY22 jumped to $31.80 billion.
Ind-Ra said the exports momentum began in March 2021, which witnessed the highest ever exports in a single month, clocking $34.45 billion. It added that India’s average monthly exports in FY20 were $26.14 billion, nearly same as in FY14.It peaked at $27.54 billion in FY19. However, FY22 has begun on a positive note. The sustained high monthly export number is even more noteworthy as this was also the period when the country was struggling with devastating COVID 2.0.