The near future clearly looks bleak for Indian exports. For India however recent economic figures mean good news. India’s trade deficit aided by lower oil prices is now at a three month low. According to the statistics shared by the Union Ministry of Commerce & Industry, the country’s trade deficit is down from 11.2 billion US dollars in May 2014 to 10.4 billion US dollars in May 2015.
Shifting the focus to the country’s volume of exports, the performance has been dismal. The value of exports currently stands around 22.34 billion US dollars. 20.19 percent lower than the previous year during which exports were valued around 27.99 US dollars. Similarly, imports have also been recording negative growth with the reasons being cited as shortcomings of the domestic manufacturing sector and dull domestic demand.
Key exporting sectors like petroleum products, gems and jewelry, engineering and chemicals have reported negative growth. Weak global demand and unrelenting internal bottlenecks have been recognized largely for declining export growth. About a fifth of India’s $2 trillion economy is accounted for by merchandise exports.
Trade and economic experts stated that revival of export growth will take a longer time than usual given the gloomy global outlook. The U.S. is grappling with poor growth while China is reporting a drastic slowdown in growth. EU and Japan are also struggling with only a slight growth in numbers. China’s slowing down has also affected other emerging economies in Asia.
Indian exporters, in particular, are losing out due to high logistics cost and ground level transaction costs. A detailed report issued by HSBC last month showed that frequent power shortages, poor rail road and port connectivity are eroding Indian exporters’ competitiveness.
President of Federation of Indian Export Organisations (FIEO) C Ralhan stated that the government would need to take immediate action to reverse the growth trajectory. This is crucial in a time when India is hoping to export $900 million of goods by 2020.