Exports, imports fall, but trade turns surplus after 18 years

Import segments which recorded negative growth include gold, silver, transport equipment, coal, fertiliser, machinery and machine tools. However, exports of oil seeds, coffee, rice, tobacco, spices, pharma, and chemicals reported positive growth in June.

India's exports fell for the fourth straight month in June as shipments of key segments like petroleum and textiles declined but the country's trade turned surplus for the first time in 18 years as imports dropped by a steeper 47.59 per cent.

Exports in value terms declined by 12.41 per cent to $21.91 billion in June on weak global demand due to COVID-19, official data released on Wednesday showed.

The outward shipments in June, however, recovered from a steeper decline of 60.28 per cent in April and 36.47 per cent in May.

Imports also plunged for the fourth month in a row by 47.59 per cent to $21.11 billion in June, leaving a trade surplus of $0.79 billion, the first time in the last 18 years.

Last time it was in January 2002 when India posted a trade surplus of $10 million.

Oil imports declined by 55.29 per cent to $4.93 billion in June.

Gold imports plunged 77.42 per cent to $608.7 million.

Exports sectors which recorded negative growth include gems and jewellery (-50 per cent), leather (-40.5 per cent), petroleum products (-31.65 per cent), engineering goods (-7.5 per cent), ready-made garments (RMG) of all textiles (-34.84 per cent), and cashew (-27 per cent).

Import segments which recorded negative growth include gold, silver, transport equipment, coal, fertiliser, machinery and machine tools.

However, exports of oil seeds, coffee, rice, tobacco, spices, pharma, and chemicals reported positive growth in June.

Commenting on the numbers, Indian Oilseeds and Produce Export Promotion Council (IOPEPC) chairman Khushwant Jain said that oil seed exports are recording growth on account of healthy output and steps taken by the government to promote shipments.

"The growth rate will continue in the coming months also. The commerce ministry is resolving all our issues," Jain said.

Mohit Singla, chairman of Trade Promotion Council of India (TPCI) said as the forward and backward linkages of economic activity are gradually repairing, the supply shock is fading and thus making produce readily available to meet demand.

"Many workers are returning back to work mainly in the manufacturing sector which is normalising the manufacturing activities and thus preparing industry to meet the global demand," Singla said.

ICRA Ltd, principal economist Aditi Nayar said while merchandise exports charted a recovery in June, merchandise imports continued to languish, resulting in trade surplus.

"However, the underlying dynamics of this trade surplus remain unpalatable, given the implications for the strength of domestic demand.

“Given the delayed recovery in imports, we expect the merchandise trade deficit to shrink to around $10-12 billion in Q1 FY2021 from around $46 billion in Q1 FY2020...We expect a current account surplus of around $14-16 billion in Q1 FY2021," she said.

Responding to June export figures, FIEO president Sharad Kumar Saraf said that the June figures show a trade surplus of $0.79 billion and last time it was in January 2002, more than 18 years back, when India had posted a trade surplus.

"However, we have to analyse imports, as such a steep decline in imports may hamper the industrial recovery in coming months.

“I am of the view that the focus should be on FTAs to further revive our exports and take up competition coming from smaller countries like Vietnam," he said.

During April-June 2020, exports fell by 36.71 per cent to $51.32 billion while imports shrank by 52.43 per cent to $60.44 billion.

The trade deficit stood at $9.12 billion during April-June.

Oil imports in April-June 2020-21 were $13.08 billion, 62.47 per cent lower as compared to $34.85 billion in the same period last year.

Since 2011-12, India's exports have been hovering at around $300 billion.

During 2017-18, the overseas shipments grew by about 10 per cent to $303 billion and further to $330.08 billion in 2018-19 and $314.31 billion in 2019-20.

Photograph: Reuters