Owing to a low base effect, India's merchandise trade shot up by 60 percent in March, after registering just a marginal 0.67 percent in February. Data released by the Commerce and Industry Ministry on 15 April showed outbound trade rose to $34.45 billion.
Calculated year-on-year, exports had fallen by 34.5 percent to just $21.4 billion in March 2020, a year back. Trade had been among the first industries to be hit in the initial days of the pandemic, after a nationwide lockdown was announced on March 23. However, the impact of lockdown in other nations had already begun, thus adversely affecting shipping flows even before that.
Taking into account March figures, India's cumulative exports in 2020-21 are now expected to be $290.63 billion, down from $314 billion in the previous financial year.
However, in what should come as good news for policymakers, non-oil, non gems (NONG) exports also increased in March, rising by 61.75 percent. While petroleum and processed gold and diamonds remain the biggest earners in India's export basket, they are prone to volatility and even subtle fluctuations in demand and supply. As a result, NONG exports are considered a clearer barometer of the export sector's health.
NONG trends held true for the entire year as well. "It is interesting to note that though the aggregate exports have declined by 5.6% in 2020-21, non-oil, non-jewellery exports have posted a positive growth of 1.08% in 2020-21, over the year 2019-20," Prahalathan Iyer, Chief General Manager, Research & Analysis, India Exim Bank said.
Engineering goods, gems & jewellery and pharma saw the biggest rise in March. Exporters say that there has been a continued revival not only in the order booking positions but also in the demand from across the globe. But rising exports from China has led to the shortage of containers in the region as most of the empty containers are available only for exports from China. There have also been complaints of China paid hefty premiums to shipping lines and container companies for bringing empty containers back to China.
In March, imports saw an equally large rise, going up by 53.7 percent to $48.38 billion. But for 2020-21, imports totaled only $389.1 billion, more than 18 percent lower than the $467.2 billion registered in the previous financial year.
In March; however, the latest upsurge was due to the continued rise in gold imports which rose by an incredible 584 percent, totaling $ 7.1 billion in March. Imports had risen to $5.2 billion in February.
India's trade deficit stood at $98.56 billion in 2020-21, down from $161.35 billion in the previous year. On a monthly basis, India's trade position has returned to the familiar deficit territory after witnessing a rare trade surplus of $800 million last year at the height of the COVID-19 pandemic-induced national lockdown. In March, it was $ 13.93 billion. Economists say that the trade deficit will continue to widen.