India’s exports decline by 8.8% to $33.88 billion in February

India’s merchandise exports dipped by 8.8 per cent year-on-year to $33.88 billion in February, recording contraction for the third straight month amid a slowdown in global demands, as per the government data released on Wednesday.

The country’s imports also declined during the month leading to further moderation in the trade deficit. India’s merchandise imports stood at $51.31 billion in February 2023, which is 8.21 per cent lower when compared with $55.90 billion recorded in the same month last year, the data released by the union ministry of commerce and industry showed.

Trade deficit declined marginally to $17.43 billion in February as compared to $17.75 billion in January. Trade deficit is the lowest in one-and-a-half years.

“The merchandise trade deficit dipped to an 18-month low in February 2023, benefiting from a dip in non-oil and non-gold imports,” said Aditi Nayar, chief economist, ICRA Ltd.

Encouragingly, there was a sequential uptick in non-oil exports, and the pace of year-on-year contraction also narrowed in February 2023 relative to the previous month.

“We expect the trade deficit to print in the range of $18-20 billion in the ongoing month (March),” Nayar said.

Gold imports, which have a bearing on the current account deficit, declined by 44.92 per cent to $2.63 billion in February 2023 as compared to $4.78 billion recorded in February 2022.

Cumulatively, the merchandise exports have crossed the $400 billion mark in the first 11 months of the current financial year. India’s total exports in the April-February period of the financial year 2022-23 rose to $405.94 billion, which is 7.55 per cent higher when compared with the corresponding period of the last fiscal.

The value of engineering items exported in the month of February declined by 9.68 per cent year-on-year to $8.58 billion in February. Engineering goods exports have seen a downward trend and recorded negative growth in seven out of the first 11 months of the current fiscal.

“We expect to surpass the engineering exports of FY22 but stay behind the target for the current financial year,” said EEPC India Chairman Arun Kumar Garodia.

Garodia further added, “collapse of two US banks and negative growth in some European markets could dampen market sentiment and further hit demand making 2023 a tough year for engineering goods manufacturers.”

Merchandise imports for the period April-February 2022-23 jumped to $653.47 billion as against $549.96 billion recorded in the same period of the previous year.

High imports have led to a sharp jump in the trade deficit. The country’s trade deficit widened to $247.52 billion in the first 11 months of the current financial year as compared to $172.53 billion recorded in the corresponding period of the last fiscal.

India’s overall exports (merchandise and services combined) in April-February 2022-23 are estimated to exhibit a positive growth of 16.18 per cent over the same period last year.

“As India’s domestic demand has remained steady amidst the global slump, overall imports in April-February 2022-23 are estimated to exhibit a growth of 19.93 per cent over the same period last year,” the Commerce and Industry Ministry said.