In continuation with the double-digit growth exhibited by exports during February 2017, merchandise exports grew by 27.59 per cent during March 2017 to reach US$29.3 billion as compared to 17.5 per cent growth posted in the previous month. This is the seventh consecutive month of a rise in exports this year. Exports have witnessed continuously positive growth numbers since September 2016 and peaked in March 2017. Robust growth in exports during March 2017 came on the back of healthy shipment of petroleum products which jumped by 69 per cent while engineering goods were up 47 per cent. Cumulatively for the April-March FY17 period, exports grew by 4.7 per cent standing at US$274.6 billion, as against exports of US$262.3 billion over the same period last year. However, the robust monthly data failed to boost annual exports to the US$300 billion mark. A revival of growth in developed economies and surge in commodity prices in the second half of 2016-17, boosted Indian shipments even though the rupee was firm against the dollar.
Imports grow by double-digits in March 2017
Merchandise imports also accelerated by a robust 45.25 per cent to reach US$39.7 billion in March 2017 as compared to a 10.7 per cent rise in the previous month. Oil imports in March saw a 101 per cent spike to US$9.7 billion while non-oil imports were up 33.21 per cent at US$29.9 billion. A jump in oil imports was driven by a staggering 33 per cent spike in global Brent prices in March 2017 as compared to March 2016. However, on a cumulative basis, merchandise imports stood at US$380.4 billion during April-March FY17, registering a de-growth of 0.17 per cent on a year-on-year basis.
Trade deficit widens
With imports growing faster than exports, the trade deficit widened to US$10.44 billion in March 2017 from US$4.4 billion a year ago. Global merchandise trade is expected to rebound this year, with the World Trade Organization (WTO) forecasting a growth of 2.4 per cent in 2017 as compared to 1.3 per cent in 2016. This prognosis augurs well for the exports outlook of India, going forward.
The signs of revival in the global economy have renewed expectations of a positive export outlook, even though a new wave of nationalism camouflaged as protectionism is a concern, especially in the services sector. Hence, it is important that the government stresses on boosting exports competitiveness in the medium-term by undertaking continuous reform measures such as ‘Make in India’, improving ease of doing business etc. Moreover, it’s important to maintain exchange rate at an appropriate level such that it would promote exports. In the past, a strong currency has hugely impacted exports.
Source: CII Economy matters – April 2017