India’s merchandise exports plummeted by 34.6% in March while imports fell by 28.7% as countries sealed their borders to fight the COVID-19 pandemic.
Merchandise exports in February had recovered 2.9% after slipping for six straight months in a row.
Out of the 30 major items in India’s export and import baskets, 29 witnessed a sharp decline in March, pointing at how the pandemic affected global demand. Only iron ore exports (58.4%) and import of transport equipment (11.9%) experienced a growth during the month.
Engineering Export Promotion Council chairman Ravi Sehgal said that the drop in merchandise exports was expected as major economies of the world are in a lockdown.
‘April would be worse as international trade excepting medicine and essential supplies has come to a near halt. Exporters are facing a question of survival,’ Ravi said.
India’s exports dropped 4.8% to $314.3 billion while imports contracted 9.1% to $467.2 billion, leading to a trade deficit of $152.9 billion in FY20.
The World Trade Organization in a recent report has estimated the global merchandise trade to fall somewhere between 13% and 32% in 2020 due to the pandemic.
‘The wide range of possibilities for the predicted decline is explained by the unprecedented nature of this health crisis and the uncertainty around its precise economic impact. But WTO economists believe the decline will likely exceed the trade slump brought on by the global financial crisis of 2008‑09,’ WTO said last week.
World Bank in its latest South Asia Economic Focus mentioned that a contracted external demand for manufacturing as well as services exports will affect India.
Sharad Kumar Saraf, president, Federation of Indian Export Organisations, said that due to the cancellation of nearly 50% of orders, massive job losses and increasing bad loans among exporting units, the government needs to unveil a relief package for exporters as any further delay would be tragic.
‘The huge support given by various economies to exports will put Indian exports in further difficulties as when the size of the cake reduces, competition intensifies with focus on prices,’ Saraf added.
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