In February 2020, when Covid-19 was yet to take roots in India, core exports had grown at 5.7%, while total goods exports had inched up by only 3.3%India’s exports of ‘core’ products, or goods excluding petroleum and gems & jewellery, have accelerated at a quicker pace than that of overall merchandise exports month after month since May 2019, belying even Covid-induced disruptions.
The ‘core’ exports, which reflect the economy’s competitiveness in external trade, grew 60.7%, year-on-year, in March to $27.3 billion, compared with a record 58.2% jump in overall goods exports to $34 billion, according to a preliminary estimate of the commerce ministry. Of course, the record surge in March was greatly aided by a base effect (exports had crashed in March 2020 due to the pandemic and the beginning of a lockdown). Nevertheless, the pace of growth was still encouraging.
While Covid-19 has hit exports of all products, what comes as a relief is the sustenance of the greater momentum in core exports than in overall outbound shipments.
In February 2020, when Covid-19 was yet to take roots in India, core exports had grown at 5.7%, while total goods exports had inched up by only 3.3%, showed the data available with the Directorate General of Commercial Intelligence and Statistics.
However, as oil prices pick up and as gold imports spike, the value of petroleum and gem & jewellery exports may rise and threaten to reverse this trend, say analysts. Already, gems and jewellery exports jumped by about 76% in March to $1.5 billion. Gold imports, which were hit by the pandemic and a spurt in prices earlier last fiscal, surged by 584% to almost $7.2 billion.
Gems and jewellery exports collapsed by almost 34% till February last fiscal, as a pan-India lockdown and migration of workers from key cities like Surat disrupted operations of most jewellers, especially in initial months. Imports of inputs, too, plunged. Similarly, a crash (42% till February) in petroleum product exports was mainly driven by moderating global crude oil prices, especially in the first three quarters of FY21 from a year before, when the rates crashed in the range of 28-54%. These weighed on overall merchandise exports, which dropped by 7.4% to $290 billion in FY21.
Within the core export category, agriculture & allied products, drugs & pharmaceutical and ores & minerals proved resilient and recorded expansion.
Exports of rice jumped by more than 31% up to February last fiscal to $7.7 billion, while those of drugs and pharmaceuticals surged by almost 16% to $22.1 billion. Even iron ore exports jumped 76% to $4.2 billion.
While both ‘core’ and overall exports have witnessed a roller-coaster ride in FY21 due to the pandemic, given the favourable base effects, outbound shipments are going to record an impressive surge in the coming months.
Already, presenting a less gloomy picture, the World Trade Organization (WTO) had in October forecast global merchandise trade to rise by 7.2% in 2021 after an estimated 9.2% drop in 2020. Still, India faces significant challenges from a potential second wave of Covid-19 if the surge in cases in certain states, especially Maharashtra, are not contained swiftly.
Do you know What is Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India, Expenditure Budget, Customs Duty? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Dont forget to try our free Income Tax Calculator tool.
Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.
