‘Global slowdown had little impact on India’s export volume’

The volume demand for Indian exports may not have suffered significantly during the past 10 months, said India Rating and Research

The Dollar Business Bureau

Despite continuous slide in Indian merchandise exports for the past 10 months, the demand for Indian products in terms of volume may not have suffered during the period, said research firm India Rating and Research (Ind-Ra). The agency attributed the downward trend in exports value to the sharp fall in global commodity prices and euro value. In September this year, India’s merchandise exports witnessed a fall of 15.1% year on year in terms of US dollars. During the same period, the average value of euro fell by more than 17%. “The volume demand for Indian exports may not have suffered significantly during the period. In fact, export volumes in certain categories such as automobiles continued to increase,” Ind-Ra said. Exports of crude oil and its products, which accounted for 18.3% of the country’s merchandise exports in 2015 declined 45.4% year on year in value over December 2014 to September 2015, in line with the fall in global crude prices. Similarly, agriculture exports which accounted for 9.7% shipment declined 19.1% y-o-y on account of a decline in the prices of agricultural commodities. “The decline in these two categories alone accounted for around three-fourths of the overall decline in merchandise exports. Also, the sharp fall in the prices of other commodities along with lower crude oil rates has depressed the prices of many intermediate and manufactured goods. Consequently, the value of exported items has shrunk,” the report said. The agency, however, projected single-digit negative growth for the rest of FY16 as the commodity prices are expected to be lower. “A marginal uptick in exports (in USD) is likely from 1QFY17 driven by the base effect,” it said. The rating agency also said that the slowdown in economic activity in Asia and Africa, which account for more than half of India’s merchandise exports, may be a bigger challenge to India’s export growth than demand from the United States (13.7% of Indian merchandise exports) or Europe (18.1%). Predicting a better prospect ahead, the report said that the demand conditions in the US and Europe are likely to continue to grow at a gradual pace and therefore will support export volumes from India in the near term. “However, export growth to Asian (49.6%) and African (10.6%) regions is likely to remain subdued as economic activity in these regions has moderated due to falling commodity prices, volatile exchange rates, and moderating domestic demand,” it said. Ind-Ra expects a modest growth in export volumes for sectors such as pharmaceuticals, textiles, automobiles and auto components but subdued performance for gems and jewelry sector.  

November 10, 2015 | 4:02pm IST.

The Dollar Business Bureau - Nov 10, 2015 12:00 IST