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Resource centre on India's rural distress
 
 

Why are India’s slowing exports a cause for concern? -K Bharat Kumar

-The Hindu

How are other export-dominated countries faring? Why is the government optimistic that domestic demand will counter the effects of declining exports?

The story so far: India’s exports declined about 16.7% in October compared with the year-earlier period. This is the first slide reported for any month since February 2021. October imports rose at a much milder pace than earlier, most likely because of softening commodity prices worldwide, and trade deficit widened by as much as 50%.

Engineering goods, which have lent a strong shoulder to India’s goods exports in recent years, slid 21%. The Engineering Export Promotion Council of India Chairman Arun Garodia attributed the slowdown to high inflation in developed regions, falling demand in China, slowdown in the EU and the U.S. and the Russia-Ukraine war. The Commerce Ministry pointed out that for October, a decline of $2 billion worth of exports was seen in steel and allied products, highlighting the fact that the government had levied an export duty on these products to help increase local availability and hence temper local prices. The government has since removed this duty. The Ministry also highlighted that in the month of Diwali every year, workers tend to take leave, thus impacting output. Therefore, one should wait and see whether export decline was only a blip or whether it was a trend that would stay.

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