Exim News

India’s Merchandise Exports Limp Along Even as Global Trade Picks Up

New Delhi: India’s merchandise exports have turned negative in October, with a surprising 1.12% drop, and are expected to fall further in November as exporters turn away clients and new orders due to the difficulty of complying with the Goods and Services Tax (GST) regime.

The fall in exports comes at a time when global trade is booming.

As per the latest forecast by the World Trade Organisation (WTO), global trade is likely to grow by 3.6% in 2017, up from the lacklustre 1.3% growth in 2016. The strong performance of world trade in 2017 is attributed to the resurgence of Asian trade flows and recovery of import demand in North America.

The timing of India’s export drop is equally perplexing given that the WTO upgraded its earlier world trade growth forecast of 2.4% on September 21. Experts say that the the decline is also surprising given that exports are usually strong in the months leading up to Christmas as retailers in Western markets build stocks.

India’s October export performance contrasts with those of its Asian trade rivals like Bangladesh, Vietnam and China who reported positive growth. Vietnam reported nearly 21.3% growth in monthly exports, China nearly 7% and Bangladesh 6.4% during the month.

India had reported impressive export growth of 25.67% in September. The precipitous drop in the October exports shows that the feared disruption in MSME supply chains has now started taking its toll on the country’s export performance.

Exports from labour-intensive industries, such as textiles, gems and jewelry and leather and leather goods have reported steep drops in October.

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