India’s exports marginally declined 0.25% to USD 27.67 billion in February while imports grew by 6.98% to USD 40.55 billion during the month, according to provisional data released by the commerce ministry on Tuesday. The trade deficit widened to USD 12.88 billion in February as compared to USD 10.16 billion in the year-ago period, the ministry said in a statement.
Last month, exports of $ 40.55 billion amounted to about 2.99 lakh crore rupees. Oil worth about 65 thousand crores was imported for 8.99 billion dollars. After rising by 6.16% in January and 0.14% in December, export earnings declined in February as trade-in major foreign exchange-earners such as petroleum, gems & jewellery and engineering goods continued to take a hit.
The exports during April-February 2020-21 period stood at USD 255.92 billion. In the same period a year ago, it was at USD 291.87 billion, showing a negative growth of 12.32 per cent. Imports during the April-February period too dipped 23% to USD 340.88 billion. Thus, there has been a decline of 12.32% in exports in the first 11 months of the current financial year. Imports have fallen by 23% during this period, with imports of $ 340.88 billion and nearly Rs 25 lakh crore.
With an 18.6% share of India’s Gross Domestic Product, the third quarter (October-December) of 2020-21 saw the contribution of exports to economic growth drop to its lowest in the current financial year. Analysts and exporters say that this is not expected to improve in the next quarter, given the poor performance of outbound trade in the current quarter.
In February, petroleum products, the biggest revenue earner, registered a 28% decline albeit better than the 32% decline seen in the previous month. Industrial products such as engineering goods also continued de-growth. Shipments of exports of engineering goods fell 2%, following an 8% fall in the previous month. The sector accounts for nearly one-fourth of foreign exchange earned through exports.
Commodities that have shown negative growth in exports in February include Petroleum Products (-27.13%), Leather (-21.62%), Cashew (-18.6%), Gems & Jewelery (-11.18%), Engineering Goods (-2.56%). ), Tea (-2.49%) and coffee (-0.73%).
On the other hand, imports rose by 7% to $40.5 billion, after January’s 2% rise. The rate of growth of inbound goods has continued to accelerate. After witnessing a rare trade surplus of $800 million last year at the height of the national lockdown, the trade deficit has also continued to climb up. In February, it rose by more than 25% to $12.8 billion. However, the latest rise was mostly attributed by experts to a 123% surge in gold imports, reflecting pent-up demand as well as elevated prices, with expectations of further imports in the run-up to the festive season.
The sector is most worried about the Rs 25,000-30,000 crore worth of tax refund under the erstwhile Merchandise Exports from India Scheme (MEIS) they are yet to receive, even as they wait for clarity on its successor tax benefit scheme.