June exports: Return to growth

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Bikky Khosla | 19 Jul, 2016
Exports registered a slight rise of 1.27 percent at $22.57 billion in June. The uptick is in no way significant by itself, but what catches immediate notice is that it came after 18 consecutive months of decline, the longest fall in recent times. This marginal rise can also be seen in the context of slow global demand. During the same month, China's exports saw a steep fall of 4.8 percent. There is little doubt that the global scenario is still challenging and the sector is still in dire need of support, but the June external trade data certainly instills some optimism.

The latest figures show 3.06 percent increase in exports of non-petroleum goods, which is encouraging. It is also to be noted that gold imports fell 38 percent in the month while imports of oil also saw a 16.42 percent decline. Among the country's top 30 export items, exports of 17 items rose in June, with growth witnessed in high employment generating sectors of carpets and handicrafts, chemicals and pharmaceuticals, etc. However, gems & jewelery and apparel exports fell in the month, which raises some concern. As far as imports are concerned, 13 of the 30 top items registered growth, with rise in machinery & transport equipment imports indicating a pickup in domestic demand.

Meanwhile, according to a recent media report, the Centre is working on a strategy to serve the export sector's information needs. As part of it, a mechanism is being planned for generating systematic real-time updates on the country's export interest from all major embassies and missions of the country across the globe. The updates would be on issues like trade barriers, changes in copyright, patent, duty structure, concession duty agreement, etc. In addition, the embassies are asked to share information about potential sectors of interest and sector-wise data on any decrease in bilateral trade. This is a welcome step.

In another development, the RBI has informed that our services export rose by 13.4 percent to $13.46 billion in May this year, from $11.87 billion in the corresponding month previous year. Here, I want to bring to notice the recommendations of a recent CII-KPMG report, which highlights the importance of enhancing exports in service sectors which still have a lot to explore for exports, such as healthcare, education, banking and finance, and also stresses on diversification of export destinations to offer services to emerging markets, in addition to the traditional developed markets of the US and Europe. I think this strategy can be a game-changer for services exports.

I invite your opinions.