Exports at 9-year high, pace of manufacturing picks up

NEW DELHI: Indian’s exports is proving to saviour for the economic recovery as it recorded a robust growth of 47.19% in July to $35.17 billion, highest in nine years, backed by shipments of petroleum, engineering, and gems and jewellery. Imports also grew by 59.38% to $46.40 billion, widening trade deficit to 11.23 billion.According to the provisional data of the commerce ministry, exports of petroleum, engineering, and gems and jewellery in July increased to $3.82 billion, $2.82 billion and $1.95 billion respectively.

Import numbers were driven by of petroleum products and gold imports.Petroleum imports were up by 97% to $6.35 billion, while imports of gold were up by 135.5% to $2.42 billion. Even precious and semi-precious stones’ inbound shipments stood at $1.68 billion in July.“This is the highest-ever exports recorded at least in the previous 9 years as per the data readily available with FIEO. It also is a sign that global trade is recovering fast,” A Sakthivel, President, FIEO, said.

He added that the order booking positions of the exporters have still been impressive.And on the back of healthy exports, manufacturing activities rebounded to a three-month high in July and hiring resumed after a contraction of 15 months. The IHS Markit purchasing managers’ index(PMI) rose to 55.3 in July. It had slipped to 11 months low in June at 48.The report added that international demand contributed to the uptick in total order books. New export orders expanded markedly in July. 

“It’s encouraging to see the Indian manufacturing industry recover from the blip seen in June. Output rose at a robust pace, with over one-third of companies noting a monthly expansion in production, amid a rebound in new business and the easing of some local Covid-19 restrictions,” said Pollyanna De Lima, economics associate director at IHS Markit.

And as output expanded and new orders came, there was a marginal increase in employment, after a 15-month of job shedding. “The PMI also brought the positive news of job creation in the manufacturing sector. Although marginal, the rise in employment was the first since the onset of Covid-19. With firms’ cost burdens continuing to rise, however, and signs of spare capacity still evident, it’s too early to say that such trend will be sustained in coming months,” De Lima said.

According to the report if there is no fresh spoiler from pandemic, there can be 9.7% annual increase in industrial production for calendar year 2021. However firms were still unsure about the path of pandemic.