The Ministry of Commerce and Industry churned out monthly exports data for July last week. According to the latest figures, exports rose 2.25 percent y-o-y in the month to $26.33 billion from $25.75 billion reported for the corresponding month of the previous year. Also, imports declined by 10.43 percent to $39.76 billion, resulting in decrease in trade deficit to $13.43 billion as against the deficit of $18.63 billion in the corresponding month of 2018. Sounds good!
At a time of sluggish global demand and uncertainties emanating from the US-China tariff war, these export figures are no doubt encouraging, but at the same time it is difficult to overlook the fact that only 17 out of 30 major product groups were in positive territory in July. In addition, we cannot turn a blind eye to the domestic concerns facing the sector, such as high cost of credit, need of interest equalization support to all farm exports and steps needed for quick refund of GST.
Meanwhile, a recent report views that the Indian export sector has recently been undergoing a 'silent transformation'. It points out the latest external trade data, showing how export of services is growing at a robust pace, while that of merchandise has contracted marginally in the first four months of the current financial year. If this trend continues – the report warns – time is not far when India's exports would be more service oriented.