India’s goods exports fell for the fourth straight month by 10.3 per cent (year-on-year) in May 2023 to $34.98 billion, pulled down by key sectors such as petroleum products, gems & jewellery, engineering items, chemicals and readymade garments, as slowdown in the developed world continued to impact demand. 

Trade deficit touched a five-month high during May 2023 at $ $22.12 billion, per quick estimates released by the Commerce & Industry Ministry on Thursday. Imports during the month declined  6.58 per cent to $57.10 billion with fall in inflow of petroleum, coal, pearls, precious & semi-precious stones, gold, transport equipment and chemicals.

Global headwinds

Commerce Secretary Sunil Barthwal attributed the decline in exports mostly to headwinds that continued on the global trade front as there was recession and slowdown in many countries.

“But we are banking on WTO’s prediction which has revised its global trade forecast (for 2023) to 1.7 per cent, up from the previous estimate of 1 per cent,” Barthwal said. The Commerce Department is optimistic of a demand revival July-August 2023 onwards, .

Some exporters, too, echoed the hope that things may improve from July. “Exports will start showing better growth numbers starting July, 2023. “We hope that exports will start showing better growth numbers starting July, 2023, as things are expected to improve from Q3 of the calendar year, with fresh orders or order bookings for festival and new year season beginning to come,” said FIEO President A Sakthivel. 

Trade strategy

Barthwal announced that the Department of Commerce and the Department for Promotion of Investments and Internal Trade (DPIIT) had worked out a trade strategy to deal with the slowdown in the developed world, which was India’s major importer.

“We have identified 40 countries with 85 per cent share of India’s exports. We will have much more focussed approach to increase exports in these countries,” Barthwal said at a press briefing on Thursday.

Invest India, the government’s investment facilitation agency, and various missions abroad, along with territorial divisions of both DoC and DPIIT will be used to implement the strategy, he said.

The government was also bringing out an export strategy based on growth rates in other countries plus trade forecast made by the WTO, the Commerce Secretary said. “The focus will be on the twin strategy of import substitution and export promotion,” he said.

In May 2023, exports posted an increase in 13 of the 30 key sectors including electronic goods (73.96 per cent), other cereals (67.96 per cent), oil meals (52.91 per cent), spices (49.84 per cent), iron ore (48.26 per cent), and oil seeds.

“Effect of duty withdrawal on iron ore is visible on India’s exports of the item,” the Commerce Department pointed out.

Trade gap

Exports during April-May 2023 posted a 11.41 per cent fall to $69.72 billion, while imports declined 10.24 per cent to $107 billion. Trade deficit during April-May 2023, at $37.26 billion, was 7.95 per cent lower than trade deficit during April-May 2022.

India’s top five export markets in April-May 2023 sequentially were the US, the UAE, the Netherlands, China and the UK. Its top import sources were China, Russia, the US, the UAE and Saudi Arabia.

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