India’s slowing exports
#GS-03 External Sector
Decline in India’s Export:
- India’s exports declined about 7% in October compared with the same month last year.
- This is the first time a decline for any month was reported since February 2021.
- Engineering goods, which generally provides a good chunk of India’s goods exports in recent years, slid 21%.
- Steel and allied products exports saw a decline of $2 billion in October.
The causes of this decline:
- The global slowdown is believed to be driven by a confluence of high inflation, rising borrowing costs and geopolitical tensions.
- The slowdown in steel exports can be because the government levies an export duty on these products to help increase local availability which was later removed.
- Another reason can be that in the month of Diwali every year, workers tend to take leave, thus impacting output.
- According to com, Vietnam recorded a 4.5% growth in exports from a year earlier to $29.18 billion
- Exports by the Philippines grew 20% in October.
Exports and Forex
- For the week ended December 2, foreign exchange reserves stood at about $561 billion.
- If we take October imports at $56.7 billion which was an eight-month low, as a benchmark, India has roughly about 9-10 months’ worth of import cover.
- This is not as healthy as the 14-to-15-month cover that we had seen during the pandemic.
- However, it is to be noted that this isn’t as bad as 2013 when foreign investors began pulling out of India’s financial markets.
- At that time, we had less than seven months’ worth of import cover.
- And if anything, forex reserves have been rising in recent weeks signalling hope for the future.