Rising for the sixth straight month, exports posted a 17.48 per cent year-on-year hike in February, the highest rate in more than five years.
A low base effect and increasing crude oil prices boosted the export of engineering goods and petroleum products, respectively, which in turn aided the growth in exports. The previous high was 36.3 per cent, in September 2011.
Exports touched $24.49 billion in February; it was $20.84 billion in the same month last year, according to data issued by the commerce and industry ministry on Wednesday.
The huge year-on-year jump is, however, a bit of a statistical illusion. Export growth in February was only slightly higher than in January ($22 billion). In fact, the absolute figures in the past two months were lower than June ($22.57 billion), September ($22.88 billion), October ($23.51 billion) and December ($23.88 billion). The current financial year (FY17) began in April 2016.
Demand for goods remained low all over the world, according to the World Trade Organization estimates.
One may argue that February has less number of days than other months, but this logic was defied by imports. In February, India imported goods worth $33.88 billion; in January, it was $31.95 billion. A spurt in inbound shipments of gold and high crude price led to the spike.
Imports rose 21.76 per cent in February, primarily because of a staggering 147 per cent rise in incoming gold ($3.48 billion). Imports of the precious metal had fallen by nearly 30 per cent in January ($2.91 billion), and nearly 48.5 per cent in December.
Import of petroleum and other crude products continued to rise by more than 60 per cent, adding $7.68 billion to the import bill.
As such, trade deficit narrowed to $8.8 billion in February, from $9.8 billion the previous month.
Cumulative exports for the financial year (FY17) up to February touched $245 billion, 2.52 per cent higher than the corresponding period (April-February) in the previous year. Cumulative imports touched $340.69 billion, a contraction of $3.6 per cent.
Trade deficit came down to $95 billion in the first 11 months, 16.65 per cent lower than last year.
Non-oil, non-gold imports — generally taken as a measure of industrial demand in the country — rose by 4.76 per cent in February for the fifth consecutive month, following a 4.16 per cent rise in January. It had risen by 4.4 per cent in December.
The index of industrial production (IIP) rose 2.7 per cent in January against contraction of 0.1 per cent in December. The non-oil, non-gold imports showed that the index might continue to rise.
“The pace of growth of non-oil, non-gold imports firmed up to 5 per cent in February from 4 per cent in January 2017. Non-oil, non-gold imports rose by 5 per cent on a year-on-year basis in February, led by coal and other ores, electronic goods, pulses and vegetable oil,” said Aditi Nayar of Icra. Petroleum exports rose by more than 27 per cent in February; in January, it grew nearly 29 per cent.
Export of engineering goods rose by more than 47 per cent, compared to the 11.89 per cent in January.
Ready-made garments rose by 5.05 per cent after a 2.13 per cent rise in the previous month. Iron ore exports rose over 1,000 per cent even as it still remained below $1 billion.
In line with the major rise in headline export growth figures, major exchange earners also saw significant growth.
"The growth across sectors in 23 out of 30 major product groups has not only been positive in February but sectors, especially iron ore, have continued to show an overwhelming growth of well over 1,100 per cent," said S C Ralhans, president, Federation of Indian Export Organisations.
However, drugs and pharmaceutical exports continued their downward trend with exports going down by 4.1 per cent, after a 11.58 per cent fall in January. On the other hand, the gems and jewellery sector managed to grow by 2.31 per cent after the 4.49 per cent fall in January. The sector had risen by 27.9 per cent in December.
Going by the current trend, exports would definitely reach $270 billion in FY17, slightly higher than $261 billion the previous year, Ralhans stated. However, it would still be lower than the commerce department’s earlier target of $300 billion.
Incidentally, international trade growth estimates had been weak for the current year.
The World Trade Organization had revised its estimates for growth for 2017 from 3 per cent to 1.8 per cent. Earlier, it had revised its estimates for growth in 2016 to just 1.7 per cent, the slowest since the financial crisis of 2008.