This contraction has been steepest in the last 25 years as India’s exports contracted by 34.5 per cent in March. As Global trade comes to standstill due demand destruction as pandemic rages across the continents. Already the demand was lacklustre in the earlier months.
Annual exports fell to $314 billion in 2019-20, 5 per cent lower than the $331 billion worth of shipments in the previous year. This is the first time in four years that annual exports have fallen.
According to the data released by the commerce and industry ministry last week, exports stood at just $21.4 billion in March, as a massive broad-based decline plagued all major foreign exchange earning sectors. This will affect the trade target of $350 billion which earlier looked achievable.
The key sectors which saw cancellation and postponement of foreign orders were gems and jewellery, engineering goods, and petrochemicals. The last time this declined of the same magnitude happened was in May 2009, when, exports had declined 34.22 per cent.
The Federation of Indian Export Organisations (FIEO) said that this is the highest-ever double-digit decline in recent times. Imports have also contracted by a 28.72 per cent due to closure of ports in China and Europe. Overall, India’s imports reduced by 8 per cent in 2019-20.
As a result, the $152.9-billion trade deficit in FY20 was much lower than $176.4 billion in the previous year.
All of the 30 major product groups recorded contraction in March, Engineering goods saw a 42.3 per cent contraction after a 8.7 per cent rise in the previous month.
It is projected that April would be worse as international trade (except medicine and essential supplies) has come to a near halt.