Despite the devastating second wave of the pandemic triggering localised lockdowns across the country, merchandise exports may be spared from a deep impact by the pandemic, over the next few months. We look at how the second-wave of the pandemic will have an impact on the country’s exports.
According to preliminary data released by the Ministry of Commerce and Industry, in contrast to the figures of the past year, India’s merchandise exports nearly trebled in April to $30.21 billion.
The growth can be attributed to a low-base effect following the nationwide lockdown in 2020. It was also backed by strong demand across sectors in the first month of the current fiscal year.
Experts believe the growth was also on the back of demand from western nations, where the pandemic is slowly losing its grip. They said that the trend is likely to remain sustainable and believe that this will continue to pick up, so long as India is able to supply and is free from supply chain disruption, there is no full lockdown, and there is more positive demand from western countries.
A good part of exports especially in April, may also be related to medicines and drugs.
Ishaan Singh Bedi, CEO – Synchronized believes that while there will be some impact of the second wave of the virus, it will not be as harsh as is being predicted. Naming a few industries that are most likely to have a crippling impact of the second COVID wave he says, “the automobile sector, small-scale industries, and the retail industry will be the first of all the industries that will see a trickling effect on the growth”
Healthy demand in labour-intensive sectors such as man-made yarns, ceramic and jute products in April shows that demand in the western markets is picking up.
India has been reporting over three lakh new infections for close to two weeks now. Several states such as Maharashtra, Delhi, UP and Jharkhand, among others, have imposed complete or localised lockdowns to stop the spread of the virus. While some nations have slowly started recovering from the disruption caused by the pandemic, the second wave is yet to hit its peak in India.
While both exports and imports remained largely resilient, despite the second wave, imports may take a hit temporarily over the next two months.
“We expect the current strength in global growth to buoy exports, as the second wave of lockdown measures imposed by states largely allow manufacturing firms in export-oriented sectors and goods transport services to operate,” said a report released by Japanese brokerage firm Nomura.
However, it feels that import growth could be marginally impacted in May and June, with the economic impact from the second wave becoming more evident and domestic consumption retracting.
“Overall, we expect imports to marginally soften sequentially in the next two months, but then rebound after June as the lockdowns flatten the pandemic curve and as restrictions will likely be gradually relaxed in June,” the report said.
According to preliminary data, merchandise imports in April were $45.45 billion, up 165.99 per cent, driven by gold, metals, medical products and electronic goods. Trade deficit was $15.24 billion, up 120.34 per cent year-on-year. The deficit was $16.30 billion in April 2019.
Showing his concerns Tushar Jani, Group Chairman, Cargo Service Centre(CSC) says that to save the supply chain from the crippling blow one has to keep the manufacturing sector safe from the impact of the second wave of the virus.
“The manufacturing sector has a big challenge and will have to take many precautions in terms of movement of people outside the factory and within factory”.
“I would be concerned vis-a-vis manufacturing sector if that gets impacted the whole supply chain can get disturbed however essential services has a better hold on the system, so the impact could be less.”~Tushar Jani, Group Chairman, Cargo Service Centre(CSC)
With the second wave of the pandemic growing bigger with more and more cases being registered every day, it is imperative for the sectors already trying to make a recovery, to successfully dodge the second wave, or else they might face difficulty to make a recovery or improve their revenues.
India’s merchandise exports in April 2021 were $30.21 billion, 197% higher than a year ago, when exports had plunged to $10.17 billion in the middle of the national lockdown.
April’s exports, however, constituted a 16% rise over April 2019. Merchandise imports rose 166% in April to $45.45 billion from a year ago, reflecting a 7.22% rise over the same month’s imports in pre-COVID 2019.