India’s merchandise exports in December fell for 13th month

New Delhi, January 18

India’s merchandise exports fell for 13th successive month in December, as orders from the United States and Europe shrank and exporters grappled with a competitively weaker Chinese yuan.

The deteriorating global economic growth outlook and rising volatility in currency markets have dampened Indian exports, although the blow has been softened by a collapse in the country’s oil import bill.

“We are facing terrible times as orders from the US and Europe have dried up,” said SC Ralhan, president of the Federation of Indian Export Organisations (FIEO), referring to shipments to India’s two largest markets.

“The slowdown in China and depreciation of yuan have further hit exports,” he said, adding that total merchandise exports could fall to about $250 billion in the fiscal year ending on March 31.

Exports in December fell 14.75 per cent from a year earlier to $22.3 billion while imports stood at $33.96 billion, data from Ministry of Commerce and Industry showed today. India’s merchandise exports declined 3.5 per cent in 2014-15 to $310 billion from previous year while imports were down 0.5 per cent to $448 billion.

Cheaper Chinese exports have undercut exports of Indian engineering goods, which constitute around a quarter of total merchandise exports. Engineering exports could fall to near $60 billion in current fiscal from $72 billion a year earlier, said TS Bhasin, chairman of Engineering Export Promotion Council.

“My own exports are down by more than 30 per cent, forcing me to retrench contract workers and sell in the local market at a lower price,” he said, adding more than 100,000 employees in engineering might lose their jobs.

Prime Minister Narendra Modi has made his ‘Make in India’ programme, which seeks to attract foreign investment in export-oriented manufacturing, a centrepiece of an economic recovery plan that needs to create a million jobs a month to succeed.

India’s trade deficit with China widened to $35.6 billion during April to November period from $32.4 billion a year earlier. During that period, its exports to China fell to $6.2 billion from $7.9 billion a year ago, reflecting a severe imbalance in trade between world’s two most populous countries.

The government offered a fiscal package of about INR 27 billion a year, in November to provide subsidised credit to exporters, hoping it could marginally help stabilise exports in coming months.

Finance Minister Arun Jaitley, who will present his annual budget for 2016-17 on February 29, is unlikely to provide much relief to exporters, officials said.