India’s goods exports in July 2022 declined for the first time in over a year, albeit only a marginal 0.76 per cent (year-on-year) to $35.24 billion, as uncertainty in the global economy slowed down demand, hitting sectors such as engineering goods, petroleum products, gems and jewellery, textiles and pharmaceuticals.

Trade deficit trebled

Trade deficit in July 2022 trebled to $31.02 billion as imports during the month increased 43.59 per cent to $66.26 billion, led by sectors including petroleum, electronic goods, and coal and coke, per preliminary trade estimates for July 2022 released by Commerce & Industry Ministry on Tuesday.

“This (almost static export performance) has been achieved despite measures to control inflation (in sectors such as iron ore & pellets, iron and steel and petroleum products) and the continued disruptions of supply chains due to Covid and Russia–Ukraine conflict,” per the Commerce and Industry Ministry statement. 

Since February this year, when the Ukraine crisis started, the world is facing turbulent times with heavy inflation in many Western countries and phenomenal increase in interest rates, Commerce Secretary BVR Subrahmanyam said at a press briefing.

Factors in India’s favour

“The external world is no longer benign. We have to work hard,” Subhramanyam said, adding that factors such as the free trade agreements recently signed by India with countries such as the UAE and Australia, exploration of new markets, as well as the demand-shift from China could act in India’s favour.

India’s exports in fiscal year 2022-23 could comfortably touch $470 billion going by the trend in exports so far, he added. In 2021–22, India’s goods exports touched an all time high of $420 billion.

Deficit more than double

India’s goods exports in April-July 2022 rose 19.35 per cent to $156.41 billion. Goods imports during the April–July 2022 period was 48.12 per cent higher at $256.43 billion resulting in a trade deficit of $100 billion, more than double the trade deficit of $42 billion in the same period last fiscal.

Exporters a worried lot

Despite optimistic projections by the government, exporters of items hit by the global slowdown, are worried about the future. “Considering that the US and Europe are among the top destinations for Indian engineering goods, recessionary trends in advanced economies would certainly have an impact on exports. The muted engineering exports in June was a reflection of the weakening demand from these markets,” according to EEPC Chairman Mahesh Desai.

Value of non-petroleum and non–gems and jewellery exports in July 2022 was $26.54 billion, registering a growth of 1.24 per cent.  Cumulative value of non-petroleum and non-gems and jewellery exports in April–July 2022-23 at $110.39 billion was 10.73 per cent higher.

Non–oil, non–GJ (gold, silver and precious metals) imports posted a growth of 42.88 per cent in July 2022 to $38.44 billion. In the April-July 2022 period,  non-oil, non-GJ imports grew 36.93 per cent to $147.55 billion.