India's merchandise exports saw a fall of 2.6 percent year on year, contracting to $34.47 billion in September. The fall was also significantly reflected in imports, which contracted by 15 percent to $53.84 billion in September 2023 against September 2022.
The bigger fall in imports led India's trade deficit to stand at a 5-month low of $19.37 billion in September, making for a year-on-year (YoY) fall of over 30 percent from $ 27.98 billion recorded in the same period last year.
Indian merchandise exports have been seeing a sequential fall every month as global headwinds and recessionary trends in India's biggest export destinations hit New Delhi's shipments.
However, according to Commerce Secretary Sunil Barthwal, the September trade data comes in with a positive sign as non-petroleum and non-gems & jewellery merchandise exports recorded an increase of 1.86 percent.
"Our falling export trend is reversing as green shoots show up. For the remaining six months, there should definitely be positive growth in our exports," he said.
"The gap in our exports year on year, which was in double digits has come down drastically. There is optimism in terms of exports, which we will see in coming months," Barthwal added.
The weekly trends, which are received by the Ministry of Commerce, have already been positive in the month of October, the commerce secretary said.
"Even though the WTO forecast has cut global growth rate from 1.7-0.8 percent, India's exports can be seen growing," he added.
On the other hand, services exports stood at $29.37 billion, reporting only a marginal uptick from the corresponding period last year where exports stood at $29.22 billion.
Services imports on the other hand saw a significant drop, falling from $16.27 billion in September last year to $14.91 billion this year.
For the first half of 2023-24, the commerce secretary said exports were down 8.7 percent YoY, while imports were lower by 12.2 percent.
11 principle commodities show positive export growth
At least 11 principal commodities have shown positive growth in export volumes in the first half of the current fiscal.
Petroleum products have been up 22 percent followed by marine products, which are up 19 percent. The biggest boost has been recorded in outbound shipments of ships, boats and floating structures, whose exports were up 126 percent YoY in the first half of FY24.
Other sectors, which have seen rising exports include rubber, dye intermediaries, leather footwear components, print, varnish and allied products, drugs and drug intermediaries along with inorganic chemicals.
Steep import fall due to commodity price stabilisation
New Delhi's imports for the month of September were recorded at a three-month low along with a YoY fall of 15 percent. Moreover, overall imports to the country contracted 12.2 percent in the first half of the current fiscal.
Commerce ministry officials said the fall can majorly be attributed to price moderation and correction.
"Last year, due to the Russia-Ukraine conflict, prices of several commodities including soya oil, petroleum products, iron & steel had all shot up, which have come down significantly now. The fall can thus be attributed to this sharp decline in prices," DGFT Santosh Sarangi said while addressing the press conference on trade data.
Officials also termed import substitution as a reason for import fall. "Significant improvement in our production capacity, also because of our Production Linked Incentive (PLI) scheme has been able to push India to become self-reliant and substitute for import items," Barthwal said.
Product substitution, as per Barthwal, has been seen in electronic products, pharmaceuticals and marine production.
India exploring new markets for exports
Demand for Indian goods in key markets such as the US, China, Bangladesh and Singapore has seen a significant drop in recent months. One of the country's strategies to alleviate falling exports has been an attempt towards the diversification of its export baskets.
As per Barthwal, India's performance in new markets has been uplifting. "Our exports of office equipment to Turkey, drugs and pharmaceuticals in Finland and Mica in the Philippines are doing well. We now have data to support it," he said.
Elaborating on the reasons behind the uptick in demand for Indian goods from newer nations, a government official said, exporters have been forced to scout for fresh markets given muted demand from New Delhi's traditional trading partners.
Also Read: India eyes diversifying imports, exports to limit fallout of US, China demand slowdown
Also Read: India's trade deficit widens to 10-month high of $24.16 billion in August
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