Exports bounce back to last year’s levels

NEW DELHI: The pace of contraction of India's exports slowed in May as relaxations in the lockdown to contain the Covid-19 pandemic led to some pick up in economic activity.

The government expects the trend to improve in June on the back of some early indications.

Exports in May shrank 36.47% to $19.05 billion against a 60% contraction in April, which was largely due to overseas orders' cancellation.


Trade deficit narrowed to $3.15 billion in May as the contraction in imports was sharper. The previous low for trade deficit was March 2016 when it was $2.18 billion.

Merchandise exports recovered faster than imports but among major items of export, only rice, spices, iron ore, drugs and pharmaceuticals recorded positive growth in May.

Rating agency ICRA said in a note that merchandise exports recovered faster than imports, recording a sharp month-on-month expansion of 84% as compared to 30% for the latter, suggesting that the easing of logistical issues may have accelerated shipments of inventory even as labour availability remained an issue in some areas.

India had announced a three-week nationwide lockdown on March 25, which was extended four times with some relaxations and finally lifted from June 1.

Commerce and industry minister Piyush Goyal has said that exports in the first week of June are at a par with what they were in June 1-7, 2019 and that he expects the contraction to narrow to 8-10% in June. Exports in June 1-7 stood at $4.94 billion as against $5.03 billion in the year-ago period, a marginal dip of about 0.76%.

"Export data reveal the process of the global economy slowly opening up," said Saugata Bhattacharya, chief economist at Axis Bank. "Indian exporters began operations late April onwards. However, the demand for many products such as handicrafts and leather was low, even if labour in India was available."

"There is a drastic arrest in fall of exports in the month against April 2020. And this has been because of the partial start of businesses and business/order enquiries from the markets like the US and EU," said Sharad Kumar Saraf, president, Federation of Indian Export Organisations (FIEO).