India’s global export plummets without warning

Amid the trade war between the US and China, the global exports of India have fallen significantly. According to data released by the Commerce Ministry, the merchandise exports in June 2019 fell 9.71% to USD 25.01 billion while imports dipped 9.06% to USD 40.29 billion. The fall left a dent of USD 15.28 billion in the form of trade deficit.

Experts believe that first fall in nine months and the resulting trade deficit of India is the signal of rising protectionist measures and trade tensions between the US and China. In June, outbound trade contracted by a significant 9.7%, after rising by 3.93% in May. According to data released by the Commerce and Industry Ministry earlier this week, exports stood at USD 25.01 billion in the month.

Modi government has blamed the fall on a high base effect and overwhelming global trading conditions. “While average exports in June have been USD 22-23 billion since 2015-16, the exports in June 2018, were relatively quite high at USD 27.7 billion,” the commerce ministry said.

Commerce secretary Anup Wadhawan told Business Standard, “Critical exports such as processed petroleum took a beating, with receipts falling by a steep margin of 32.85% to USD 2.73 billion. This was due to refineries in Jamnagar and Mangaluru being shut over the month.”

“The shutdown of Jamnagar refinery is likely to abate by mid-July. The fall in the global Brent price by 15.6% in June is also a factor in the declining value of petroleum product exports,” the official added.

During June, petroleum exports declined 33% while non-oil, non-gems and jewellery exports contracted by 4.86%. Among other major items, exports of gems and jewellery (10.7%), readymade garments (-9.18%), chemicals (-8.17%) and engineering goods (-2.65%) also contracted.

“The negative growth in June is also consistent with certain global trends, which have impacted India’s exports in recent months. We expect exports growth to revive to the trend growth rate of 2-3% in coming months,” said the government official. The World Bank in its Global Economic Prospects released in June has projected weakening of global trade in 2019. Global trade is projected to grow at 2.6% this year—a full percentage point below its own previous forecast.

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