India’s trade performance continued a declining trend in the month of June 2023 in the backdrop of the global slowdown with merchandise exports in June 2023 falling 22 per cent to USD 32.97 billion from USD 42.28 billion in June 2022. Merchandise trade deficit for June shrunk to USD 20.13 billion as merchandise imports in June 2023 fell to USD 53.10 billion, compared to USD 64.35 billion in June 2022, data released by the Commerce Ministry showed on Friday.
India’s overall exports, combining merchandise and services, in June 2023 is estimated to be USD 60.09 billion, exhibiting a negative growth of 13.16 per cent over June 2022 while overall imports last month is estimated to be USD 68.98 billion, falling as much as by 13.91 per cent over June 2022.
The downtrend comes amidst the World Bank Global Economic Prospects report of June 2023 cautioning against a substantial slowdown in the global economy in 2023 to the tune of 2.1 per cent, after growing at 3.1 per cent last year. In May 2023, India’s merchandise exports were USD 34.98 billion, while imports stood at USD 57.10 billion.
The data showing month on month decline in exports and imports also underlines the impact of low non-petroleum and non-gems and jewellery exports in June 2023 at USD 25.13 billion, compared to USD 28.15 billion in June 2022. Imports of the same category which includes gold, silver and precious metals, in June 2023 were USD 33.28 billion, compared to USD 38.93 billion in June 2022. Textiles exports continued to decline in June 2023 because of subdued demand due to recessionary effects in major economies.
President of the Federation of Indian Export Organisations, A Sakthivel attributes the moderating pace of growth in merchandise exports in 2023 to persistent geopolitical tensions. “Exports have seen decline on the back of slowdown in growth coupled with demand contraction across the globe, disruption in global supply chain due to Russia-Ukraine war, monetary tightening and recessionary fears which have continuously led to a fall in consumer spending across the globe especially in advanced economies,” said Sakthivel.
Global headwinds also pulled down India’s trade figures in the first quarter of April-June 2023, with merchandise exports sliding to USD 102.68 billion as against USD 120.98 billion during April-June 2022. Merchandise imports for the June quarter were USD 160.28 billion as against USD 183.54 billion during April-June 2022. However, the merchandise trade deficit for Q1 FY2023-24 improved by 7.9 per cent to USD 57.60 billion as against USD 62.55 billion during April-June 2022.
Sectors like non-petroleum and non-gems and jewellery under performed with exports during April-June 2023 going down at USD 77.18 billion, as compared to USD 83.82 billion in April-June 2022. Imports of gold, silver and precious metals which make up the basket were USD 100.84 billion in April-June 2023 as compared to USD 110.22 billion in April-June 2022.
In April-June 2023, exports of merchandise and services combined exhibited a negative growth of 7.29 per cent over April-June 2022. Overall imports too tanked by 10.18 per cent over April-June 2022. Aditi Nayar Chief Economist ICRA Ratings finds the merchandise trade deficit in June 2023 exceeded forecast with a sharp sequential uptick in gold imports, which offset half of the compression in the net oil deficit. According to Nayar, most of the sub groups of exports reported a YoY contraction in June 2023, reflecting an unpalatable combination of lower demand and commodity prices. “In absolute terms, petroleum products accounted for half the fall in exports in June 2023 relative to June 2022. We project the current account deficit to widen sequentially to USD 11-13 billion in Q1 FY2024, on the back of a wider merchandise trade deficit and smaller services surplus.
On the brighter side, India’s trade deficit has shown considerable decline in April-June 2023. The merchandise trade deficit was USD 57.60 billion compared to USD 62.55 billion during April-June 2022, registering a decline of 7.92 per cent. The overall trade deficit for the June quarter of 2023 is estimated at USD 22.59 billion as compared to the deficit of USD 31.49 billion during the same period of 2022, registering a decline of as much as 28.27 per cent.
Yet another positive of India’s trade performance is the export robustness of 9 of the 30 key sectors which brought in positive growth for the month of June 2023 as compared to the same period last year. Exports of iron ore grew 1664.3 per cent, oil seeds 33.33 per cent, cashew 19.6 per cent, tobacco 17.8 per cent, fruits and vegetables 14.1 per cent, coffee 7.1 per cent, handicrafts excluding hand made carpet 5.14 per cent and drugs and pharmaceuticals grew 5.13 per cent. Electronic goods export stood out with growth of 45.4 per cent and 47.1 per cent in June 2023 and April-June 2023 respectively over the corresponding period last year.
Drugs and pharma export registered 5.13 per cent and 5.10 per cent growth in both June 2023 and April to June 2023 respectively as compared to same period last year.
For April-June quarter of 2023, merchandise exports of 11 of the 30 key sectors exhibited positive growth over the corresponding quarter of 2022 such as electronic goods which increased 47.05 per cent, iron ore 35.01 per cent, oil meals 33.15 per cent, oil seeds 25.13 per cent, spices 18.24 per cent, fruits and vegetables 14.12 per cent, ceramic products and glassware 9.47 per cent, tobacco 7.45 per cent, drugs and pharmaceuticals 5.1 per cent, coffee 4.32 per cent and rice 3.63 per cent.
CIT down to USD 20.13 bn
In the IPO landscape, the first half of 2023 saw 11 initial public offering (IPO) deals worth a total of USD 1.4 billion. This represented a 35 per cent decrease in the number of deals and a 77 per cent decrease in the total value compared to the same period in 2022. The decline can be attributed to the absence big size IPO listing. On the other hand, there were 10 qualified institutional placement (QIP) deals worth USD 794 million, indicating a 43 per cent increase in the number of issues and a 17 per cent increase in issues size compared to H1 2022.