On track to hit $400-billion export target for FY22; Russia-Ukraine crisis weighs
Sharp increase in shipments of engineering goods, petroleum products, gems & jewellery and chemicals pushed up India’s goods export in February by 21.88 per cent (y-o-y) to $33.81 billion, per preliminary data released by the government on Wednesday.
With total goods exports in the April-February period at $374.05 billion, an increase of 45.8 per cent over the same period last year, exporters are inching closer to meeting the target of $400 billion set by the Commerce and Industry Ministry for FY22.
The on-going conflict between Russia and Ukraine, however, is a growing concern for sectors such as engineering goods, which have a market in Russia, due to uncertainty over payments as well as rising freight costs.
Imports up 35% y-o-y
Goods import also increased 34.99 per cent to $55.01 billion, widening trade deficit to $21.19 billion from $13.12 billion in February. The rise in imports is attributable to sectors including petroleum, electronics, gold, coal and chemicals.
Imports in the April-February period, at $550.12 billion, were 59.21 per cent higher than that in the same period last fiscal, almost doubling the trade deficit to $176.07 billion compared to $88.99 billion in the comparable period of 2020-21.
The value of non-petroleum exports in February was $29.70 billion, registering a growth of 18.04 per cent over the year-ago period. Non-petroleum imports came in at $39.96 billion, up 26 per cent over the February 2021 numbers.
Exports had taken a beating in 2020-21, declining 7 per cent to $292 billion, with Covid-19 disruptions affecting manufacturing. However, with a revival in global demand, exports have been on a rise in FY22.
“With monthly exports crossing the $30-billion mark for the 11th consecutive time this fiscal, we are on course to crossing the $400-billion target for the fiscal,” said A Sakthivel, President, FIEO. This would translate into a growth of 40 per cent-plus over exports in the previous year.
Challenge of Ukraine crisis
While the engineering goods sector is on track to achieving its export target of $107 billion in 2021-22, the Russian invasion of Ukraine is proving to be a challenge. “Among the CIS countries, Russia is the biggest market for Indian engineering goods. Exclusion of Russia from the SWIFT payment system would, therefore, mean delayed realisation for exporters,” said Mahesh Desai, Chairman, EEPC.
The Ukraine crisis has already pushed up prices of key commodities, especially crude oil and metals. “The shipping cost, which has already been going through the roof, would further hurt exporters,” he said.
Sakthivel said the need of the hour was to quickly announce an extension of the interest equalisation scheme, extend the input duty reimbursement scheme RoDTEP to EOUs/SEZs and expand usage of RoDTEP and RoSCTL scrips.
aniltikotekar4sme.com 