Why in News?
As per the data released by the Union Ministry of Commerce and Industry, India’s goods exports in May (2024) logged a sharp 9% year-on-year jump. However, the country's trade gap increased to a seven-month high of $24 billion due to higher oil imports.
What’s in Today’s Article?
- What India’s Export Data Shows?
- India's Export Data Country-Wise
- What the Recent Export Data Signifies?
What India’s Export Data Shows?
- Jump in goods/ merchandise exports-imports:
- New Delhi’s goods exports in May (2024) jumped 9.10% to $38.13 billion from $34.96 billion the year-ago month.
- Meanwhile, imports rose at a relatively slower pace of 7.6% to $61.91 billion from $57.49 billion in May 2023.
- Services exports-imports:
- Services exports rose to $30.16 billion in May from $26.99 billion in the corresponding month of last year, registering a healthy 11% increase.
- Services imports rose 8.81% year-on-year to $17.28 billion. In May 2023, services imports were at $15.88 billion.
- Reasons for this jump in exports (both overall and goods exports):
- The growth was led by electronics, petroleum and engineering goods and also driven by demand revival in India’s traditional exports markets such as Europe and the United States (US).
- For example, while electronic goods exports jumped 22% year-on-year, engineering exports rose 7.39%. Exports of the labour-intensive readymade garments (RMG) of all textiles were 9.84% higher in May.
- This is a reflection of the fact that inflation in major advanced economies has gone down.
- This augurs well for India’s exports as purchasing power in these markets improve with inflationary pressure coming down.
- The merchandise trade deficit:
- It surged to a seven-month high of $23.78 billion in May. This was 5.5% higher than the deficit recorded in May 2023.
- 71% of the enlargement in the merchandise trade deficit in May 2024 relative to April 2024 was driven by a sharp rise in volumes of oil imports amidst lowering in prices.
India's Export Data Country-Wise:
- Exports to the US:
- It rose by over 13% from year-ago levels to $7.42 billion in May.
- This comes after the US economy is recovering at a faster-than-expected pace, which resulted in the World Bank upgrading its outlook for the global economic growth to 2.6% this year from its earlier projection of 2.4%.
- Outbound shipments to the United Arab Emirates (UAE): It jumped nearly 19% year-on-year to $3.06 billion. However, India’s imports from the UAE (nation with which India has an FTA) jumped by a sharp 50% to $5.2 billion.
- Shipments to the Netherlands: Exports to the Netherlands, which is an export hub in Europe, jumped 44% over May 2023 to $2.19 billion.
- India’s exports to Australia: In May, it slipped by 3.52% to $519 million compared to $538 million. The India-Australia free trade agreement (FTA) came into force in December 2022.
What the Recent Export Data Signifies?
- Goods exports with a growth of 9% compared to May 2023 is not only a good sign but also goes to show efforts and hard work, which the exporters are putting together.
- Exports are expected to grow further with improved demand coming in from the European Union, UK (United Kingdom), West Asia, and the US.
- The rising trade deficit must be seen in the context that India is growing faster than the world. For example, India's economy is growing over 7%, while the global economy is growing at about 2.6%.
- While both the near and medium-term outlooks remain positive, exporters are facing the challenges of -
- High ocean freight rates on some key routes.
- China is shipping large volumes to the US in the wake of additional import duties that could be applicable to Chinese goods from August this year.
