Supply disruptions, low demand for petro, engineering products bring down India's exports

Supply side disruptions, low demand for refined petroleum products and engineering goods in other countries, a sharp reduction in crude prices are some of the reasons that brought down India’s export by 9% last month, writes ETV Bharat's Krishnanand Tripathi

New Delhi:India’s exports declined by 8.74%, from $25.77 billion in November 2019 to $23.52 billion in November this year as refined petroleum products, engineering goods, plastic products, chemicals registered a decline in shipments, according to the latest official data released by the ministry of commerce.

While export of petroleum products declined by over 58%, shipment of leather products declined by 27% followed by plastic products, which registered a decline of over 20%. While the shipment of engineering goods, India’s biggest export, declined by 4.56%, organic and inorganic chemicals declined by 4.5%, oil seeds shipments declined by 12%, and marine products by nearly 13%.

Two of the three biggest components of the country’s exports, engineering goods, petroleum products registered a decline in shipment while only gems and jewellery exports, which form the third biggest chunk after engineering goods and petro products, registered a positive growth of over 8% in November this year.

“Close to 9% degrowth in November exports is a reminder for acting fast to reverse deceleration, said EEPC India Chairman Mr Mahesh Desai.

“Exporters need to be empowered by way of faster refund of GST and availability of raw material,” Desai told ETV Bharat.

Sharad Kumar Saraf, President of Federation of Indian Export Organisations (FIEO) blamed supply side disruptions, low demand for engineering goods and crashing crude oil prices behind the decline in the country’s exports last month.

“Supply side disruptions including restricted container movement and declining petroleum exports and farmers agitation in some of the hinterland states have affected exports during the month,” Saraf told ETV Bharat.

According to industry sources, farmer’s agitation in Punjab that resulted in suspension of rail services in October-November has already affected the container movement before farmers arrived at the Delhi border late last month.

Trade experts, however, are optimistic that the export will pick up in the coming months as Indian companies have a healthy order book position, which would be further strengthened by the positive business sentiments due to rollout of the Covid vaccine in near future.

“Exports have been seeing signs of revival as order booking position has continuously improved and more new orders are in the offing,” said the FIEO President.

Saraf said the arrival of the Covid vaccine along with gradual lifting of lockdown across the country and the globe has lifted the business sentiments.

“Going by this trend, we expect to end the financial 2020-21 with an overall merchandise exports of about $290 billion, Saraf told ETV Bharat.

Industry sources have pinned their hopes on the Christmas and New Year sale, saying if it goes well then it will liquidate the inventory and lead to more demands in future that will be good for Indian exports.

Iron Ore, Gems and Jewellery in demand

Despite the subdued business and economic activity due to the outbreak of Covid-19 global pandemic, India’s iron ore exports registered a sharp spike of over 68% during the month of November, from $195 million in November 2019 to $328 million in November 2020.

While the export of ceramic products went up by 26%, from nearly $217 million in November last year to $263 million, the shipment of drugs and pharmaceutical products registered an increase of over 15% year-on-year basis. Export of pharma products went up from $1,790 million in November last year to $1,989 million during the same this year.

An increase in gems and jewellery exports in November was able to partly offset the decline in the export of engineering goods and petroleum products.

Shipment of gems and jewellery went up by over 4%, from $2,584 million in November 2019 to $2,690 million in November this year.