India’s merchandise exports strengthened in January, rising 3.1% on-year to $36.92 billion after 1.0% growth December. Despite disruption in trade caused by strife around the Red Sea, exports have fared better than expected, which can be partly attributed to proactive support by the government in the form of easier access to credit, creation of a task force to investigate non-tariff barriers, and tackling sanitary and phytosanitary issues, among others.
While the numbers are encouraging, caution is warranted. Rising global tensions and unevenness in global growth, mean maintaining export momentum will not be an easy task. For instance, many core exports softened in January: electronic goods (9.3% v 14.4%), engineering goods (4.2% v 10.2%), and drugs and pharmaceuticals (6.8% v 9.3%). And some key agricultural exports have been under pressure partly due to the ban on rice exports.
That said, exports of petroleum products rebounded (6.6% v -17.6%) after four months as crude oil prices saw a sequential uptick ($80.1/bbl in January vs $77.6/bbl in December).
Also, interestingly, chemical exports - one of India’s key export items - seem to be gaining some traction, posting mild positive growth (0.3%) after remaining in contractionary zone for fifteen consecutive months. On the whole, core (non-oil, non-gold1) exports grew 2.5% on-year in January, compared with 5.4% in December.
Cumulatively, India’s merchandise exports have declined 4.8% on-year in April-January this fiscal to $354.04 billion, compared with $372.1 billion a year ago.
