Spurred by double digit growth in shipment of engineering goods and pharma products, exports rose by 5.71 per cent at $25.91 billion in April. This was a recovery since exports had dipped 0.66 per cent in March.
However, major labour-intensive sectors gems and jewellery, leather and ready-made garments continued to see decline which may affect the job scenario.
The rise in global crude prices notwithstanding, exports of refinery products declined 4.48 per cent in April. However, the rate of contraction reduced from 13.22 per cent in March and 27.44 per cent rise in February.
Non-oil, non-gems and jewellery exports rose 11.73 per cent in April against 4.60 per cent rise in the previous month.
However, India’s export growth continued to be overshadowed by the influx of imports which rose 4.60 per cent in April, albeit lower than the 7.15 per cent import rise in March.
As a result, monthly trade deficit in April marginally rose to $13.7 billion, marginally higher than $ 13.6 billion registered in March and lower than February’s $12 billion.
Rise in imports were primarily due to a more than 41 per cent jump in crude imports, up from the 13 per cent rise in the previous month, reflecting global prices which have continued to rise.
Experts have predicted that India’s oil bill will continue to expand in the current financial year as external pressures such as the fallout of the Iran deal and a possible cut down in production by oil producers again heat up prices.
“Assuming an average price for the Indian crude oil basket of $70/barrel, we expect the net petroleum, crude and products import bill to surge to $93 billion in FY2019 from $70 billion in FY2018. This is likely to push up the current account deficit to $65-70 billion or Rs 2.4 per cent of GDP in FY2019,” Aditi Nayar, Principal Economist at ICRA, a credit-rating agency, said.
However, non-oil, non-gold imports, denoting domestic industrial demand, fell by 0.14 per cent in April, after rising continuously for the past few months. It had risen by 12.2 per cent in March and 7.28 per cent in February. The contraction in April may impact the index of industrial production which rose 4.4 per cent in March.
Exports were up, primarily due to engineering and pharma goods. Engineering goods exports rose by 17.63 per cent in April to ship out $ 7.18 billion worth of exports, up from the 2.62 per cent rise in March. Pharma exports also rose 13.56 per cent to $ 1.46 billion in April, bettering on its 8.40 per cent growth in the previous month.
However, of the 30 major product groups, 16 recorded growth in April down from 18 a month back. However, the rate of contraction has reduced from 13.22 per cent in March and 27.44 per cent rise in February.
Among labour-intensive sectors, ready-made garments export has continued to drop since October, 2017. With only a $ 1.49 billion worth of outbound shipments made, exports in the sector fell by a significant 22.76 per cent in April, higher than the 17.78 per cent fall in March.
“At present, the Industry is going through a tough period with its competitiveness greatly eroded. This is reflected in the unprecedented month on month decline in the apparel exports every month after October 2017,” H K L Magu, Chairman, Apparel Export Promotion Council said.
“Almost all the labour-intensive sectors of export including gems & jewellery, leather & leather products, ready-made garments of all textiles, jute manufacturing including floor covering, carpets, handicrafts, agri products and many other sectors of exports, dominated by MSMEs are into negative territory.” Ganesh Kr Gupta, president of the Federation of Indian Exports Organization (FIEO) said.
Exports in sectors dominated by MSMEs are still facing the problem of liquidity as banks and lending agencies have continuously been tightening their lending norms and flow of GST refund has also slowed down, which does not augur well for exports in the new fiscal, he added.
So far as the decline in gems and jewellery sector is concerned, a senior functionary of the Gems and Jewellery Export Promotion Council (GJEPC) said the pace of exports is expected to be muted going forward as well as the sector continues to suffer from a availability of funding from banks which has tightened their lending norms.