After reducing for three months, the pace of contraction of India’s exports rose in August. Export earnings in the month declined by 12.6 per cent year on year, higher than July’s 10.2 per cent fall, as trade in major foreign exchange earners such as petroleum, gems, electronics, and textiles continued to take a hit. Outbound trade stood at $22.7 billion, completing six straight months of contraction.
Earlier, the government had been hoping to reach a single-digit contraction by August, with a tentative growth forecast for September.
The data for August, released by the commerce department on Tuesday, shows cumulative exports in the first five months of the financial year fell 26.65 per cent compared to the same period in the previous year.
Exports continue to remain hamstrung by the deep economic slowdown induced by the Covid-19 pandemic across India’s key markets of Europe, the US, and the Gulf region. In August, 15 of the 30 major product groups showed growth, down from 16 in the previous month. Only drug exports continued to capitalise on the Covid-19 pandemic, and saw substantial growth of 17.3 per cent, slightly lower than July’s 19.5 per cent. However, all other major export categories remained deep in the red.
Petroleum products, the biggest revenue earner, registered a 40 per cent decline, albeit better than the 51.5 per cent fall seen in July. After stabilising in recent months, industrial products such as engineering goods again slipped into de-growth. Shipments of exports of engineering goods fell 8 per cent to $19.7 billion, following similar growth in the previous month. The sector accounts for nearly one-fourth of foreign exchange earned through exports.