India’s exports rise faster than imports in September

NEW DELHI: India’s external trade turned positive, perhaps for the first time, with growth in exports surpassing that of imports for the first time, in September 2017, bringing festive cheer for exporters and policy-makers. Merchandise exports from the country moved to a higher growth trajectory of 25.67 per cent with September exports reaching $28.61 billion, helped by better performance by all the top 10 commodity groups, ranging from engineering items to textiles. Although exports have been in the positive zone for the past 13 month, it is for the first time that growth in exports surpassed that of imports. The trade deficit, too, narrowed in September by 0.95 per cent to $8.98 billion against 9.07 billion in September last year, but the overall trade deficit during the April-September 2017-18 period stood at $72.13 billion. Cumulative exports during April-September 2017-18 stood at $147.19 billion against cumulative imports of $219.32 billion, leaving a gap of $72.13 billion.
Import growth rate was slightly lower than export growth, with gold imports declining by 5 per cent. Imports into the country increased 18.09 per cent in September 2017 to $37.59 billion, according to an official data released on Friday. Imports during September 2017 were valued at $37.60 billion (Rs242,282.96 crore) which was 18.09 per cent higher in dollar terms and 14.02 per cent higher in rupee terms over the level of imports valued at $31.84 billion (Rs212,486.28 crore) in September 2016. Cumulative value of imports for April-September 2017-18 stood at $219.32 billion (Rs141,1872.70 crore) against $175.34 billion (Rs1,173,664.70 crore), recording a positive growth of 25.08 per cent in dollar terms and 20.30 per cent in rupee terms over the same period last year. Exports during September 2017 were valued at $28.61 billion (Rs. 184387.36 crore ), showing a growth of 25.67 per cent in dollar terms and 21.35 per cent in rupee terms compared to exports valued at $22.77 billion (Rs151,950.74 crore) in September 2016. Apart from engineering goods exports, which posted a sharp increase of 44 per cent during the month to $7.32 billion, other sectors that registered growth included gems and jewellery, petro products, organic and inorganic chemicals, readymade garments, drugs and pharmaceuticals, cotton yarn/fabs/made-ups, handloom products, marine products, rice and electronic goods. Oil imports, at $8.18 billion were 18.4 per cent higher than in September 2016. Non-oil imports, at $29.40 billion, were 17.9 per cent higher. Gold imports came in at $ 1.71 billion.

India Exports Imports

Trade deficit may improve to $10.3 billion in August: Morgan Stanley

India's trade deficit is expected to improve in August to about USD 10.3 billion from USD 11.5 billion in July, largely on moderation in export as well as import growth, says a Morgan Stanley report.
According to the global financial services major, the moderation, on a year-on-year basis, is likely owing to higher oil prices and unfavourable base effects.

"We estimate a moderation of export growth to 3.4 per cent year-on-year in August from 3.9 per cent in July and imports of 11.3 per cent in August from 15.4 per cent in July," Morgan Stanley said in a research note.
The report noted that gold imports are also likely to have remained strong in August at around 61 tonnes (USD 2.5 billion), though lower than the pre-GST levels of about 130 tonnes (USD 5.4 billion).
Besides, non-oil non-gold imports, which is a proxy for domestic demand, is expected to continue to post strong growth.
According to official data, India's trade deficit stood at USD 11.44 billion in July from USD 7.76 billion in the year ago period.
Cumulative export during April-July of 2017-18 rose by 8.91 per cent to USD 94.75 billion while import increased by 28.30 per cent to USD 146.25 billion, leaving a trade deficit of USD 51.5 billion.

Meanwhile, the second part of the Economic Survey, which was tabled in Parliament in August, India's rising trade deficit and protectionist tendencies on the global front are areas to watch for in the short term.

India's garment exports may hit $20 billion in FY18

MUMBAI: India's garment exports are expected to register a 15-18 per cent growth to touch USD 20 billion during the current fiscal following improved market conditions in US and other markets.

"We have clocked 15 per cent growth in garment exports at USD 17 billion in FY17. We expect 15-18 per cent in current fiscal to register exports of USD 20 billion.

"The US market, which consists of 30 per cent market share is doing reasonably well and we are also looking at good exports potential to South America, European, Middle East and Japanese markets this year," Clothing Manufacturers Association of India (CMAI) president Rahul Mehta told PTI here.
Due to the world recession and heavy competition from China, Bangladesh and Vietnam, India could not fulfill the export target for the year 2016-17.

However, there has been a growth in export to the tune of 13 per cent in dollar terms, in the last 5-6 months. This has been mainly due to the favourable special apparel package announced in July 2016.

"We are strong player in spring and summer wear, but we need to increase exports of autumn and winter wear, which we hope to do in coming years," he said.

Mehta said demonetisation last year had not hit the industry and proposed GST (Goods and Services Tax) rates implementation is also unlikely to impact the industry adversely.

Whilst welcoming the GST, Mehta said there could be some confusion and uncertainty for initial 2-3 months for manufacturers and dealers. However, in the long run, it will be beneficial to the garment industry.

The government has accepted most of the recommendations made by CMAI, and keeping a majority of the industry under the 5 per cent GST slab, he said.
Although, there is some concern among fabric manufacturers for the 5 per cent duty. The government has also accepted CMAI's request to reduce the GST applicable on job work from 18 per cent to 5 per cent, but unfortunately this has been done only up to the fabric stage, Mehta said.
Job working in garmenting still attracts 18 per cent GST. This will be a major blow to the small manufacturer, most of whom follow the job work basis of manufacturing. CMAI has requested the government to reconsider this obvious anomaly and reduce GST on job working at the garment stage to 5 per cent.
To showcase the business opportunity, CMAI is organising 65th national garment fair, the largest apparel trade show in Mumbai from July 10-12.
The B2B fair will be spread over approximately 6 lakh square feet, covering all the halls at the Bombay Exhibition Centre.

The trade show will have 881 stalls displaying 1005 brands by 822 exhibitors.

Garment exports India

Garment exports imports

Exports need to grow at 26.5 % annually for India to grab 5% share of the world trade

Exports need to grow at 26.5 per cent annually for the next five years for India to reach a “respectable’’ 5 per cent share in world trade from the existing 1.7 per cent it has been stuck at since 2011, according to the second part of the Economic Survey for 2016-17.

This could be achieved only through reforms in trade policy by diversifying exports, rationalising tariffs and developing world class export infrastructure, it added.

Making a case for lowering average applied tariffs, the Survey stated that there is scope for reduction by selectively bringing down tariffs across many lines, while retaining higher tariffs for sensitive and important items.

On a bold note, it further proposed that bound tariffs (ceilings) committed to at the World Trade Organisation could be reduced which can help India to take a more pro-active role in multilateral and bilateral negotiations.

India’s negotiating team at the WTO, at present, is focussed on getting a fair deal in the area of agriculture subsidies and protecting sensitive items against import surges and has not shown any interest in negotiating tariff reduction.

Trade policy
Highlighting the importance of the forthcoming review of the country’s Foreign Trade Policy next month, the Survey said that the review exercise is particularly important in the light of recent international developments and special efforts are needed to not only review but accelerate India’s exports.

India’s exports grew 4.7 per cent in 2016-17 after two years of continuous decline.

In a suggestion that the exporters might not treat with enthusiasm, the Survey proposed that some export promotion schemes could be phased out if tariffs are reduced to realised or near realised levels, while others could be streamlined as many duties have been subsumed under GST.

The duty drawback rates (refunds given to exports in lieu of input duties paid) can also be revised downwards and the revenue saved could be used for export marketing efforts.

To increase exports, the Survey made a case for a demand based export basket diversification rather than a mere supply based strategy. It also stressed that world class export infrastructure and logistics, especially port-related, need to be developed on a war-footing.

For greater States’ participation in exports, devolution of funds to States need to be linked with their export effort, it suggested.

Green shoots
On a positive note, the Survey said that some green shoots have started to appear on the trade horizon with world trade growth projected at 3.8 per cent and 3.9 per cent in 2017 and 2018, India’s exports continuing to be in positive territory for the fourth consecutive month in May and in double digits in April-May 2017. All external sector indicators like reserves cover for imports, external debt to GDP ratio, foreign exchange reserve cover for external debt and debt servicing ratio, too, are in the comfort zone.

It, however, cautioned that rising trade deficits on the domestic front and rising protectionist tendencies on the global front are things to watch in the short term.
On currency fluctuation, the Survey pointed out that while the rupee has been one of the most stable currencies among EMEs, the appreciation of the real effective exchange rate (REER) indicates that India’s exports have become slightly less competitive.

Lauding the government’s move to bring FDI in most sectors under automatic approval route, except a small negative list, the Survey said that it resulted in FDI equity inflow of $43.4 billion in 2016-17, which is not only an increase of 8 per cent over the previous year, but also the highest ever equity inflow.

Exports will get 5 per cent of global pie with special efforts: Economic Survey

NEW DELHI: Rationalising tariffs, phasing out some export promotion schemes and having “useful” free trade agreements with some major countries will help India gain a “respectable share” in world exports, the second volume of the Economic Survey released on Friday said.

India's rising trade deficit and protectionist tendencies on the global front are areas to watch for in the short term, it said as India’s share in global exports has stagnated at 1.7 % from 2011 to 2016 with intermittent drops to 1.6%.

Citing rising protectionism, trade restrictive measures and risk of a backlash against movement of persons adding to a situation that is of growing concern, the survey said special efforts are needed to take India’s exports to a respectable share of at least 5% in world exports from 1.7% in 2016, which is very low compared to China’s 13.2%.

Streamlining export promotion schemes as many duties have been subsumed under GST, demand-based export basket diversification rather than a mere supply-based strategy and developing world-class export infrastructure and logistics on a war footing, are some recommendations of chief economic advisor Arvind Subramanian-authored survey.

It also said the focus should be on increasing FDI-linked and value-added exports, particularly high-tech exports as in China and some Asean countries.
Referring to the rise of anti-globalisation sentiment in recent years, the survey said such tendencies have surfaced with developments in the US during and after elections and the Brexit referendum.
People are viewing trade, immigration and multilateral engagements with some amount of scepticism and becoming wary of benefits of globalisation, it said. On trade curbs, the survey said there has been a rise in recent years of such steps including several types of non-tariff barriers.


GREEN SHOOTS VISIBLE 
The survey did contain some cheer for the export sector, saying that green shoots have started to appear on the trade horizon with world trade growth projected at 3.8% and 3.9% in 2017 and 2018, respectively, and India’s trade growth also picking up.
“With the green shoots slowly becoming visible in merchandise trade, and robust capital flows, the external position appears robust, reflected inter alia in rising reserves and a strengthening exchange rate," the Economic Survey said.
Reflecting the slowly improving world economic situation, India’s exports turned positive at 12.3% in FY17 after an interval of two years.

Reflecting the slowly improving world economic situation, India’s exports turned positive at 12.3% in FY17 after an interval of two years.
In FY17, services exports recorded growth of 5.7% with a pickup in some major sectors such as transportation, business services and financial services along with good growth in travel. However, as per the survey, software services exports, accounting for around 45.2% of total services, declined marginally by 0.7%.