With over 8 lakh COVID-19 positive cases, India might be on the verge of becoming the next global hotspot for the pandemic. However, there is also some positive news coming up during such overwhelming times. For the first time in 18 years, India may report its first monthly trade surplus in June. The pace of contraction of exports is expected to have slowed down by about 12%, while imports have dropped by almost 49% during the last month. Additionally, India’s June export numbers are also likely to recover after the great fall in April and May led by the pandemic. Commerce and Industry Minister Piyush Goyal have confirmed that the export figures may touch almost 88% as compared to those from the corresponding period last year. However, labor-intensive sectors such as textiles & garments, farm, marine, gems & jewelry, leather, stone, cement, and ceramic, along with other ancillary segments, continue to suffer. Given the current circumstances, it would be ideal for the government to look at sectoral issues and address the concerns of these segments for an overall healthy recovery.
Trade Update
12TH JULY
# 77
The country’s exports, after contracting drastically in April and May due to the COVID-19 pandemic, are “recovering fast” and it will be reflected in the data for June, Commerce and Industry Minister Piyush Goyal said on 3rd July. Addressing export promotion councils through video conferencing, the minister said the June data will reflect the gains, “with the merchandise export figures touching almost 88% of the corresponding period last year”.
Growth of India’s exports from labor-intensive sectors has been slowing at a faster pace in recent years than overall outbound shipments, according to official data. While exports of merchandise dropped by 5.1% in FY20 to $313 billion, those from job-sensitive sectors -- such as textiles & garments, farm, plantation, marine, gems & jewellery, leather, stone, cement, ceramic and some other allied segments -- slid by 8.4% to $114.2 billion.
Steel companies are likely to face a slow-growing export market in the next few months after a sizable jump in exports in Q1. In addition, the drop in domestic steel production will keep the growth of the sector in check this year. Pressure on exports is mounting as global recovery faces a seasonal slowdown. In addition, export prices dipped marginally even as the quality of exports is tilted toward low-margin products.
India may register its first monthly trade surplus in over 18 years in June as the pace of contraction of exports is estimated to have slowed down to around 12%, while imports are seen to have fallen almost 49% during the month. Initial estimates for June, available with the commerce department, show a trade surplus of around $786 million, with imports pegged at $21.1 ..$21.1 billion and exports at $21.9 billion.
Competitiveness indices have been used as a barometer by business leaders, investors and analysts globally to test business friendliness of countries for making trade and investment decisions. A big question post COVID-19 is about the extent future trade and investment decisions can be made solely based on such indices, given their narrow focus on economic indicators and infrastructure. Expansion of such metrics by incorporating indicators pertaining to resilience, inclusivity, equity, environmental protection, social protection, and climate change impact, among others, seems to be imperative now.