Favourable global trade outlook is expected to accelerate India’s export growth, said India Ratings and Research (Ind-Ra).
Ind-Ra said that India’s exports, which have been languishing for quite some time, can take advantage of the favourable trade growth outlook of 2021 and consolidate its position further than what has been witnessed in Q1FY22.
“In YoY growth terms, India’s exports grew 60.29 per cent, 195.72 per cent, 69.35 per cent and 48.35 per cent in the months of March, April, May and June 2021, respectively.
“No doubt, the growth numbers reflect the depth of the Covid-19 shock last year but Ind-Ra believes they also show the strength of the current recovery, adequately captured by the monthly export number.”
As per Ind-Ra, the average monthly exports during Q1FY22 jumped to $31.80 billion.
“In fact, the exports 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 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.”
According to the agency, the pickup in Q1FY22 exports has primarily been driven by the higher exports of engineering goods, petroleum products, cotton yarn or fabs or made-ups, organic and inorganic chemicals, drugs and pharmaceuticals, plastic & linoleum, and iron ore.
“Performance of gems and jewellery, another key export product, has been somewhat lacklustre. Although monthly exports of gems and jewellery did show some pick-up, it remined in the range of $2.5 billion-3 billion since September 2020 with the exception of March and April 2021, when monthly exports of gems and jewellery was $3.6 billion and $3.4 billion, respectively.”
“Readymade garments, another labour-intensive and crucial export commodity, witnessed monthly exports of $1.1 billion in 1QFY22, lower than the average monthly exports of $1.4 billion witnessed during FY16-FY20.”
In addition, the agency pointed out that ‘World Trade Organisation Trade Barometer’ on May 28, 2021 was 109.7, nearly 10 points above the baseline value of 100 for the index and 21.6 points higher than same period last year, reflecting the strength of the current recovery.
“However, 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 the merchandise exports to grow 6.9 per cent YoY in FY22.”