India’s exports contracted 36.47 per cent (year-on-year) in May 2020 to $19.05 billion with labour intensive sectors such as leather, handicrafts, gems & jewellery and jute taking the hardest hit as manufacturers tried to re-start production amidst numerous Covid-19 restrictions.
The country’s trade deficit in May 2020 shrank to a low $3.15 billion compared to $15.36 billion in May 2019 as imports dropped sharply by 51.05 per cent to $22.20 billion during the month, according to figures released by the Commerce & Industry Ministry on Monday.
Gold imports down
Gold imports dropped by 98.4 per cent to $76.31 million while petroleum imports fell 72 per cent to $3.4 billion, as per the data.
Although India’s exports performed better in May 2020 than in April when outbound shipments dropped 60.4 per cent to $10.36 billion mainly due to a nationwide lockdown, exporters find the situation worrying with some making a case for additional incentives.
“As the major economies try hard to re-open, demand would be restricted to only the most essential items. Even within engineering exports, we need to re-work our strategy.
“Sub-sectors like medical devices would be doing well while core infrastructure industries may take time to recover,” said Ravi Sehgal, Chairman, Engineering Export Promotion Council of India.
In fact, the four items which posted a growth in exports in May 2020 are mostly essentials including pharmaceuticals, rice, spices and iron ore.
‘Need for more incentive’
“The need of the hour is to immediately provide additional MEIS incentive of 2 per cent across the board and 4 per cent for labour-intensive sectors, besides allowing rollover of forward cover without interest and penalty and automatic enhancement of limit by 25 per cent to address liquidity challenges,” said Sharad Kumar Saraf, President, FIEO.
Goods hit
Major commodity groups which have contracted during May are leather & leather products, handicrafts, handmade carpet, gems & jewellery, petroleum products, ready made garments, jute manufacturing, including floor covering, man-made yarn, meat, dairy & poultry products (-56.38 per cent), electronic goods and engineering products, the release stated.
Total exports for the period April-May 2020-21 were $29.41 billion which was 47.54 per cent lower than exports in the comparable period last fiscal.
Cumulative imports in the first two months of the on-going fiscal were $39.32 billion posting a fall of 54.67 per cent year-on-year.
Trade deficit in April-May 2020-21 was $9.91 billion which was less than a third of the trade deficit of $30.69 billion in April-May 2019-20.