India’s goods exports, which fell for the seventh consecutive month in April this year, contracted the most among major Asian economies, including China and South Korea.
Trade experts attribute this to a less diverse trade basket, among other reasons.
Goods exports from four Asian countries — China, South Korea, Indonesia and Thailand — shrunk 19-25 per cent in April 2009, while exports from India fell at a much larger pace of 33 per cent in the same month. But the impact of this sharp fall will be limited, as exports constitute only a small portion of India’s Gross Domestic Product (GDP).
“Share of goods exports in India’s GDP is too low unlike, say, China. So the impact on the GDP is low as well,” said DK Joshi, principal economist with ratings and advisory agency Crisil. China’s exports are 40 per cent of the GDP, compared with India’s 15 per cent.
India’s goods exports have been on a steady decline since October, when the financial turmoil began the contraction in the key markets of the US and EU.
Only Japan, Asia’s largest economy, recorded a much bigger drop in exports when compared to India. Overseas sale of Japanese goods shrunk by 40 per cent in April, compared with a 45 per cent contraction in March 2009.
Joshi further added that India’s export pie comprises mainly services like Information Technology (IT) and IT-enabled Services (ITeS). Inclusion of these would lead to positive growth in export statistics, as against merchandise goods that have been in the negative territory.
“Outsourcing has indeed seen moderation due to the current crises in the Western economies, but has not taken a blow like merchandise trade,” he added.
Indranil Pan, economist with Kotak Mahindra Bank, said Indian exports were minuscule as compared to other nations, particularly China and Indonesia. “A lower base in exports leads to our trade showing a more accelerated percentage drop,” he said.
It is striking to note that China’s total exports in March alone were over $90 billion, compared to India’s total exports of $168 billion for the fiscal ended March 2009.
“Sharp drop in exports of petro products and uncompetitiveness of Indian exports is the prime reason of fall in Indian exports,” said Shubhada Rao, senior economist with YES Bank economist.
