Indian exports jump three-fold amid virus resurgence

India’s exports in April jumped nearly three-folds or 197.03 per cent to $30.21 billion from $10.17 billion in the same 2020 month, according to commerce ministry’s preliminary data released on Sunday.

Imports too rose to $45.45 billion last month as against $17.09 billion in April 2020.

“India is thus a net importer in April with a trade deficit of $15.24 billion, which increased by 120.34 per cent over the trade deficit of $6.92 billion in April 2020,” the ministry said in a statement.

The three-fold jump in exports came amid signs that India’s economy may shrink in the current quarter ending in June as Covid-19 cases surged. Sonal Varma, India chief economist at Nomura, said the country is “clearly going to see a sequential growth hit” in its first quarter. India’s fiscal year begins in April and ends in March the following year. She predicts that gross domestic product will shrink around 1.5 per cent in the current quarter, which ends in June. Varma added there is “downside risk” to this estimate.

However, despite the two-fold surge in trade deficit in April, foreign exchange reserves increased by $1.701 billion to $584.107 billion in the week ended April 23 2021, bolstered by accumulated current-account surplus, rising inflows into the local stock market and foreign direct investment. Currently reserves are enough to cover roughly 18 months of imports, data from the Reserve Bank of India showed.

In 2020 April, due to the Covid-19 pandemic induced lockdown exports shrank by a record 60.28 per cent. In March this year, exports grew by 60.29 per cent to $34.45 billion.

In April 2021, the value of non-petroleum exports was $26.85 billion, registering a positive growth of 200.62 per cent over $8.93 billion in April 2020 and a positive growth of 19.44 per cent over $22.48 billion in April 2019.

The value of non-petroleum and non-gems and jewellery exports in April 2021 was $23.51 billion, registering a growth of 164.28 per cent over $8.90 billion in April 2020.

Oil imports in April were at $10.8 billion, a growth of 132.26 per cent compared to $4.65 billion in April 2020.

Non-oil imports in April were estimated at $34.65 billion, showing an increase of 178.6 per cent compared to $12.44 billion in April 2020 and an increase of 12.42 per cent compared to $30.82 billion in April 2019.

Major commodity groups of export showing growth in April 2021 over April 2019 were iron ore, other cereals, oil meals, rice, cereal preparations, electronic goods, drugs and pharmaceuticals among others.

Meanwhile, foreign Portfolio Investors (FPI) ended their buying spree in April as they pulled out net investments worth Rs96.59 billion from Indian equities during the month.

The reversal in trend came at a time when the surging Covid cases and the resultant lockdowns spooked investor sentiments.

The FPIs turned net sellers after a gap of five months. In September, FPIs pulled out net investments worth Rs77.83 billion.

Along with the second wave of Covid-19, weakness in the Indian rupee also led to the outflow of foreign funds last month, analysts said.

The net FPI investment in 2020 now stands at Rs460.83 billion, including the net investments of Rs194.73 billion, Rs257.87 billion and Rs104.82 billion in January, February and March, respectively.

— issacjohn@khaleejtimes.com