India’s slowing exports

India’s slowing exports

India’s slowing exports

#GS-03 External Sector

For Mains

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.

Global Exports:

  • 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.

Source “Why are India’s slowing exports a cause for concern?