‘Global headwinds’ push down India’s goods exports 12.2% in December

India’s goods exports in December 2022 declined 12.2 per cent (year-on-year) to $34.48 billion, pulled down by items such as petroleum products, gems & jewellery, engineering goods, cotton yarn & fabrics, coal, and meat & dairy, as global headwinds and recessionary trend in major developed country markets continued to take a toll on demand, according to data released by the Commerce Department on Monday.

The country’s goods imports, too, declined during December 2022, although at a lower rate of 3.4 per cent to $58.24 billion, as gold, chemicals, dyeing/tanning materials, project goods and cotton took a hit, with trade deficit at $23.76 billion, per the quick estimates.

Exporters are hopeful that the government would meet some of their demands for support in the forthcoming Union Budget 2023-24 to help them tide over difficult times.

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Trade deficit widens

During April-December 2022, country’s goods exports increased 9 per cent to $332.76 billion while imports rose 24.96 per cent to $551.7 billion. Trade deficit for April-December 2022 widened to $ 218.94 billion from $136.45 billion in April-December 2021.

Exports of electronic goods, including smartphones, recorded a growth of 51.56 per cent to $16.67 billion during April –December 2022 and were a bright spot, according to the government. Exports of petroleum products, too, posted a high growth of 52.15 per cent during the period to $ 70.28 billion registering a growth of 52.15 per cent.

In fiscal 2021-22, India’s exports were highest in December, so the growth rate for the month was calculated on a high base, Commerce Secretary Sunil Barthwal said at an interaction with the media on Monday.

“In most of the Western world, including Europe and the US, there are recessionary trends. In China, there are problems due to the Covid-19 situation…We are facing a lot of headwinds,” the Secretary said adding that despite all downsides, India’s export competitiveness was holding up.

India’s top export destination in April-December 2022 was the US with exports growing 6.8 per cent to $59.57 billion. UAE was the second largest export destination with exports at $23.13 billion (increase of 15.4 per cent) while Netherlands was at third spot with exports to the country growing 68.86 per cent to $ 13.67 per cent. China was India’s fourth largest export destination in the April-December 2022 with a 35.58 per cent decline to $11.03 billion.

The country’s exports started slowing down in July 2022, but stayed in the positive zone till  October 2022, when goods exports declined for the first time in the on-going fiscal falling 16.6 per cent to $29.78 billion. It rose marginally by 0.6 per cent to $32 billion in November 2022.

WTO forecast

The WTO brought down its forecast for global trade volume growth to 1 per cent from 3.4 per cent estimated earlier, due to ``multiple shocks’’and growth slowing down in major economies.

“Considering the gloomy world economic outlook for 2023, the global trade prospects are dim and its signs have been visible in the high-frequency numbers. In view of this, we see challenging times ahead for the engineering goods sector. We hope that in the upcoming Union Budget, the government will consider our demands…,” said Arun Kumar Garodia, Chairman, EEPC India.

Exporters’ key demands include lowering corporation tax for partnership firms, tax exemption for MSMEs, and weighted tax deductions of up to 150 per cent on costs incurred due to export promotion in other countries.

Non-petroleum and non-gems & jewellery exports in December 2022 were $27 billion, compared to $29.52 billion in December 2021. Non-petroleum, non-gems & jewellery (gold, silver & precious metals) imports in December 2022 were $36.93 billion, compared to $35.95 billion in December 2021.