Merchandise exports to grow 6.9% year-on-year in 2021-22: India Ratings

Some of the major export destinations for India's top-10 commodities, such as the US and parts of Europe, are expected to see strong import growth in 2021

Outbound shipments from India, which have been languishing for quite some time, can benefit from the favourable trade growth outlook of 2021 and consolidate further from the level achieved in the first quarter of this fiscal, India Ratings and Research said on Thursday.

As per its analysis, export destinations for India’s top-10 commodities are likely to see strong import growth in 2021.

“For example, the US which is part of North America and the UK, Belgium, Germany, Italy and the Netherlands, which are part of Europe are expected to clock import growth of 11.4 per cent and 8.4 per cent YoY, respectively in 2021,” according to a report released by India Ratings.

Even as merchandise exports have been robust over the last four months, the rating agency warned that the threat of the pandemic still looms.

“As the threat of Covid-19 is not yet over, a lot will depend on the pace and coverage of immunisation in different parts of the globe. Ind-Ra, therefore, expects merchandise exports to grow 6.9 per cent YoY in FY22 (FY21: negative 12.5 per cent and FY20: negative 5.0 per cent),” the report said.

The outbreak of Covid-19 and subsequent lockdowns in various parts of the world caused massive disruption in the first few months of the financial year 2020-21. As far India is concerned, outbound shipments picked up particularly March onwards, buoyed by recovery in external demand. Besides, shipments largely remained unaffected by the outbreak of a second wave during April-June in India, even as imports temporarily slowed during May.

While exports grew substantially compared with last year due to a base effect, India Ratings said they also show the strength of the current recovery, adequately captured by the monthly export number. The average monthly exports during April-June stood at $ 31.80 billion.

“In fact, the export momentum began in March 2021, which witnessed the highest ever monthly exports of $34.45 billion. India’s average monthly exports in FY20 were $26.14 billion, nearly the same as in FY14. It had peaked at $27.54 billion in FY19. However, FY22 has begun on a positive note. The sustained high monthly export number is even more noteworthy as this was also the period when the country was struggling with devastating Covid 2.0,” it said.