The Red Sea disruptions and recessionary trends in the West notwithstanding, India’s goods exports inched upwards in January 2024, posting a 3.12 per cent growth (year-on-year) to $36.92 billion, propped by sectors such as electronics, engineering goods and pharmaceuticals.

Imports increased 2.99 per cent to $54.41 billion in January 2024, with crude oil, electronics, coal and gold shipments contributing significantly to the rise. Trade deficit of $17.49 billion during the month was marginally higher than $17.03 billion in January 2023, per data released by the Commerce Department on Thursday.

“Despite red sea crisis, recession in the Western economies and falling commodity prices, we have been able to achieve growth, which is significant and not marginal. Our congratulations to the exporters (for their resilience),” Commerce Secretary Sunil Barthwal said at a press briefing.

During April-January 2023-24, exports declined 4.89 per cent to $353.92 billion while imports were lower by 6.71 per cent at $561.12 billion. Trade deficit in April-January 2023-24 narrowed to $207.20 billion compared to $229.37 billion in April-January 2022-23.

Exporters are apprehensive that if the Houthi attacks in the Red Sea continued, the situation could deteriorate. Exports had not gone down yet as exporters were forced to execute the old orders despite the high shipping costs, they said. “Much will depend on the new agreement to be signed with buyers during the new fiscal as exporters have been absorbing the burden of increased freight cost as per the old agreement,” according to exporters’ body FIEO.

High freight rates

The compulsion of exporting to Europe and the US east coast through the Cape of Good Hope, which was much longer, had resulted in “unimaginably high” freight rates, pushing Indian exporters to hold back around 25 per cent of the outbound shipments transiting through the Red Sea, FIEO added.

“When new contracts are entered into, some countries that are not impacted by the crisis, such as Kenya and South Africa, may benefit,” a Delhi-based exporter pointed out.

The Commerce Secretary, however, expressed hopes that growth would be maintained in the coming months as his department’s efforts to work with exporters, ministries concerned and other stake holders on the Red Sea crisis would continue.

“We also told the banks that whatever maximum credit can be given during this period to our exporters should be extended. Exim bank and ECGC were told not to increase insurance premium rates. This overall positive atmosphere which we create...has helped in (promoting) the export growth,” he said.