Red Sea headwinds do not deter India’s exports, registers 3.12% growth

Despite Red Sea disruptions and recessionary trends in the West, India’s goods exports showed a 3.12% YoY growth in January 2024, reaching $36.92 billion. Sectors such as electronics, engineering goods, and pharmaceuticals played a pivotal role in this growth. Imports also increased by 2.99% to $54.41 billion during the same period, with significant contributions from crude oil, electronics, coal, and gold shipments. The trade deficit for January stood at $17.49 billion, slightly higher than $17.03 billion in January 2023, according to data released by the Commerce Department on Thursday.

Commerce Secretary Sunil Barthwal commended exporters for their resilience, stating, “Despite the Red Sea crisis, recession in the Western economies, and falling commodity prices, we have been able to achieve significant growth, not marginal.”

For April-January 2023-24, exports declined by 4.89% to $353.92 billion, and imports saw a 6.71% decrease at $561.12 billion. The trade deficit for this period narrowed to $207.20 billion compared to $229.37 billion in April-January 2022-23.

Exporters express concerns about the continuous Houthi attacks in the Red Sea, fearing a potential deterioration in the situation. While exports have not declined yet, exporters are forced to fulfill old orders despite high shipping costs.

The Federation of Indian Export Organisations (FIEO) notes that the compulsion to export through the Cape of Good Hope due to the crisis has resulted in “unimaginably high” freight rates, causing Indian exporters to withhold around 25% of outbound shipments transiting through the Red Sea.

The Commerce Secretary remains hopeful that growth will persist in the coming months, emphasizing ongoing efforts with exporters, relevant ministries, and stakeholders to address the Red Sea crisis. He highlighted collaborative efforts with banks to extend maximum credit to exporters during this period, ensuring that Exim Bank and ECGC do not increase insurance premium rates. Overall, these measures aim to maintain a positive atmosphere and promote export growth.

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