The Indian Economy has shown significant resilience amidst the global pandemic and trade shock that began to impact the global economy towards the end of 2019-20 and acquired catastrophic proportions in 2020-21. Government of India has said on Tuesday that the cumulative value of overall exports (merchandise & services) during April-March 2020-21 has been estimated at USD 493.19 Billion compared to USD 528.37 Billion during April-March 2019-20, registering a negative growth of (-) 6.66 percent. He added that it reflects a remarkable recovery over the course of the financial year after the huge downturn in April 2020 reflected in decline in merchandise exports by (-) 60.28% and services exports by (-) 8.92 %.
“The overall trade deficit, taking merchandise and services together, for April-March 2020-21 is estimated at 12.74 USD billion as compared to the deficit of 77.76 US Billion in April-March 2019-20. The merchandise trade deficit between 2019-20 and 2020-21 declined from USD 161.35 Billion to 98.56 Billion”
Trade data for March 2021, the final month of 2020-21 reflects the build-up of a strong recovery in exports despite several challenges. The overall export (merchandise and services) for March 2021 is estimated at USD 52.20 Billion, registering a positive growth of 31.64 percent vis-à-vis March 2020. Merchandise exports in March 2021 grew by 60.29% as compared to March 2020, which was substantial even after factoring in the base effect.
This was driven by healthy export growth in key sectors such as engineering goods (71.30%), gems &jewellery (78.93%), petroleum products (35.52%), drugs & pharmaceuticals (48.49%) and Organic & inorganic chemicals (46.50%). Merchandise Exports-other than POL and Gems &Jewellery had an even more impressive performance in March 2021 attaining a value of USD 27.42 Billion, as against USD 16.95 Billion in March 2020, an increase of 61.75%.
The cumulative value of merchandise exports during April-March 2020-21 has been estimated at USD 290.63 Billion compared to USD 313.36 Billion during April-March 2019-20, which is a negative growth of (-) 7.26 percent, which is fairly moderate given the prevailing global situation. If Gems & Jewellery and PoL exports, both involving very moderate value addition, are excluded, the growth in merchandise exports in 2020-21 was actually (+) 1% i.e. an increase over 2019-20, notwithstanding the Covid disruption.
This reflects immense adaptability in our exporters in capturing new opportunities in sectors like other cereals, oil meals, rice, cereal preparations & miscellaneous processed items, drugs &pharmaceuticals, spices, fruits &vegetables, carpets, jute manufactures, ceramic products & glassware and organic &inorganic chemicals, while containing the downturn in other sectors in the face of huge challenges. The decline in export values in petroleum products and G&J also, predominantly reflected decline in global prices rather than volumes.
Petroleum products exports declined by $15.4 Billion y-o-y during FY 2020-21. This is a significant fraction of the decline in India’s total merchandise exports in FY 2020-21 of 22.7 USD billion. Export of Petroleum Products showcased a decline of (-) 37.3% YoY (-$15.4 Billion) during FY 2020-21. Share of Petroleum Products in overall exports also declined to 8.9%during FY 2020-21 as compared to 13.2% in FY 2019-20. Petroleum demand had been badly hit due to Covid-19 related lockdowns across the globe. Hence, the drop in exports was unavoidable during this period.
Additionally, there has been a major decline in oil prices in the past year which has subdued the value of exports during this period. In this context it is mentioned that in Apr-Feb 2020-21, Pol export has recorded negative growth of (-) 42.8% and (-) 10.9% in value and quantity respectively over Apr-Feb 2019-20
Decrease in exports of diamond and other jewellery further dragged down overall exports and showed a decline of USD 9.9 Billion y-o-y during FY 2020-21, again a significant component in the overall fall of USD 22.7 Billion. Diamond and other jewellery registered a drop of 27.5% YoY (-$9.9bn) during FY 2020-21. Share of Gems &Jewellery in overall exports also declined to 9.0%during FY 2020-21 as compared to 11.5% in FY 2019-20. Further, Indian industry imports rough or unpolished diamonds from other countries for finishing/polishing/cutting etc. Therefore, the import content is very high in exports of Diamonds and other jewellery resulting in low value addition.
The commodities/commodity groups which have recorded positive growth during 2020-21 as compared to 2019-20 are Other cereals (219.13%), Oil Meals (87.91%), Iron Ore (86.78%), Rice (37.06%), Cereal preparations & miscellaneous processed items (21.16%), Drugs & Pharmaceuticals (18.07%), Spices (10.37%), Fruits & Vegetables (8.63%), Carpet (8.39%), Jute Mfg. including Floor Covering (8.29%), Ceramic products & glassware (6.02%) and Organic & Inorganic Chemicals (0.51%).