Deceptive signals: On India’s goods exports numbers​

October’s foreign trade tidings present a picture that could well be misread​

Last month, India’s goods exports recorded only their second uptick this financial year, with a 6.2% rise. Merchandise imports grew a sharper 12.3% over last October and nearly 21% over September’s tally to hit an all-time high of $65.03 billion. The trade deficit, as a result, also hit a record $31.5 billion. The import bill was expected to go beyond the relatively tepid trends in recent months, spurred by anticipation of festive demand for items such as jewellery and high-end electronics. But this surge, and the deficit tally, was beyond expectations, with economists describing it as ‘a rude shock’ thanks to ‘idiosyncratic’ effects. The Finance Ministry’s monthly economic review asserted that merchandise exports “surprised on the upside” with the highest growth in 11 months, and that exports and imports have grown “despite fears of weak global demand”.

The high imports and the likely deficit trajectory need not trigger much anxiety yet. The recent decline in oil prices should help this inelastic import bill recede from the seven-month high of $17.7 billion. While festive and wedding demand spiked gold and silver imports to an extent, price drops in precious metals in early October also played a role as jewellers sought to ramp up stocks before prices rebounded. Similarly, not all of the bump up in electronics imports can be construed as consumption demand. That October was the last month of free imports of personal computers, laptops and servers before the ‘deferred’ implementation of new import ‘licensing’ norms, now euphemistically rephrased as an ‘import management system’, also triggered players into stockpiling inventories of these items. The government has been trying to rein in the import bill through such measures and a slew of quality control orders, but boosting exports is more critical to support job creation and economic growth. What is worrying is October’s headline uptick in exports is a statistical kink – the shipments’ value of $33.6 billion is actually the lowest in 12 months and 6% below the 2021 tally. Global trade grew 2% month-on-month in October, but Indian exports dropped 2.6%. This is a clear sign that incremental opportunities that a slowing world is throwing up are being lost out on.
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