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Merchandise exports fell for the eighth month in a row in July, contracting 10.3 per cent to $23 billion, compared to $26 billion in the same month a year ago.
Exports have been falling continuously since November 2014. The highest fall was in May when exports fell 20 per cent.
Total exports during April-July 2015 stood at around $90 billion, down 15 per cent compared to $106 billion in the year-ago period, according to commerce ministry data released on Friday.
World trade has been under pressure for quite some time now with demand drying up fast in the developed markets. Chinese exports fell eight per cent in July, which lead the country to devalue its currency.
“This is a pan-Asia story. Export of all countries is tumbling. Global trade volumes are not rising. However, with exports falling continuously month after month, it might well be that we have lost share in the global pie. In some sectors, we have definitely lost competitiveness. It is high time the government introduced interest subvention as that will ease the burden to some extent,” said D K Joshi, chief economist, CRISIL. Export of marine products, meat, cereals and mica also shrank in July by 17.6 per cent, 12.5 per cent, 73 per cent and 12.8 per cent, respectively.
According to economists, the situation might become worse with China devaluating the yuan by 3.5 per cent.
“Exports will continue to remain sluggish unless global demand revives. The only trick is to stay competitive, which again looks difficult with China devaluating the yuan twice. China is also among the top five countries for Indian exports and India’s exports to China declined 19.5 per cent year-on-year to $11.9 billion in 2014-2015,” said Devendra Kumar Pant, chief economist at India Ratings and Research.
On the other hand, imports in July also fell 10 per cent to $36 billion against $40 billion in July last year. Total imports plummeted 12 per cent to $135 billion from $153 billion.
Oil imports in July this year were down 35 per cent to $9.5 billion, compared to $14.6 billion in July last year. Total oil imports were also down 38 per cent to $34 billion compared to $55 billion.
Meanwhile, gold imports jumped 62 per cent to $2.96 billion from $1.82 billion.
Trade deficit widened to $12.81 billion in July from $10.83 billion in the previous month on account of rise in gold imports. This might have some impact on the current account deficit if the widening continues.
However, it is expected that exports might see some positive turnaround from August onwards. This was reflected in the growth of manufacturing sector by 4.6 per cent in June in the industrial production index.
This was also echoed by the Federation of Indian Export Organisations.
It, however, cautioned against excessive volatility in the wake of the devaluation of yuan.
