India's Exports continue to tumble

India's exports continued its downward trend amidst weak global demand. This has been backed up by a weak environment alongwith the commodity turmoil. India's exports in November contracted more than 24.43 per cent to USD 20 billion when compared to its previous USD 26.4 billion in the past year. Exports for the April-November period also saw a contraction of 18.46 per cent to USD 174.3 billion from USD 213.7 billion as compared to the corresponding period last year.

This decline however is not India – specific. Globally too the emerging market economies have been witnessing a steep decline in their exports due to a weak demand environment along with currency pressures due to the devaluatio of the Chinese Yuan which is affecting other countries competitiveness in the international markets.

On the other hand imports in November contracted sharply by 30.26 per cent to USD 29.7 billions from the earlier staggering numbers of USD 42.7 billion. Imports for the cumulative April-November period too saw contraction by 17.21 per cent to USD 26.1 billion from USD 31.6 billion on a yearly basis.

A sharp decline in imports have helped to narrow the trade deficit to USD 9.7 billion which is a significant decline of around 40 per cent from USD 16.2 billion a year ago. The valueof oil imports in the month of November were 44.99 per cent lower as compared to the corresponding period last year, whereas the value of non-oil imports were down by 24.7 per cent which is a cause for concern. In a major way petroleum, engineering goods and gems & jewellery have been a drag in terms of exports. They saw a decline of 53.9 , 28.57 and 21.52 per cent respectively. However, on a brighter side jute products, carpets and tea saw a slight increase in exports. Imports declined sharply as commodities like fertilizers, coal, crude and gold decreased between 45 and 65 per cent on a yearly basis.

Indian equities have shown a mixed reaction, as exports and imports along with their components is currently positive for several companies while some others feel the pressure emanating out of the decline.

The BSE Capital Goods index have been indicative of the steep decline in exports as they have been underperforming in the broader markets. Capital Goods Index is down close to 10 per cent on YTD. Companies like Thermax, Bharat Forge, L&T etc are trading close to their 52 week low as the main export markets exhibited a slowdown in demand. BSE Oil & Gas have seen a mixed trend as it constitutes oil marketing,exploration and refining companies.

Despite several steps undertaken by the government to boost exports, the depressed global demand, declining commodity prices alongwith the devaluation of Chinese Yuan, is going to weigh on India's exports, which is mostly likely to remain subdued in the coming months. The imports would mostly pick up at a relatively slower rate owing to strong domestic consumption as the economy grows at a faster rate and leads to a subsequent increase in discretionary spending. The overall imports which constitue large chunk of India's import would expand at a diminishing pace as prices of crude are likely to remain low.