Reasons Why India saw growth surge in Exports and How does it affects Economy

Alan Joseph Alan Joseph
May 13, 2021 4 min read
Reasons Why India saw growth surge in Exports and How does it affects Economy

The exports of India during the month of April have seen a significant rise. Experts have said that it is mainly due to the low base effect caused by the Covid-19 pandemic. Letโ€™s look at the reasons for an increase in the exports of the country.

Indiaโ€™s Exports figures
Increased Demand for Products
Imports Data
Further Estimations
FAQ

Indiaโ€™s Exports figures

The exports of India during the month of April have increased to up to 197 % due to the low base effect. A Low base effect is a small change from an initial amount which would be translated into a large percentage change.

The Covid-19 lockdown during the previous year had temporarily stopped the economic activity which has led to the merchandise export of India which nearly increased three times to USD 30.21 billion over the same period year.

The exports have seen an increase of 16.03 % compared to the previous year that is 2019. This indicated that the low base was also supported by an increased demand in the first month of the fiscal year.


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Increased Demand for Products

The increase in exports during April was mainly increased due to the demand for products such as petroleum, gems, jewellery and engineering products. The latest data has shown that the increase in the cases due to the second wave of Covid-19 and the lockdowns in the country in different regions have not affected the demand for the products.

In the month of April, the value of exports from non-petroleum goods has increased by 200.62 % of up to USD 26.85 billion when compared to April 2019 which was USD 19.44 %. There has been an increase in the value of non-petroleum, gems and jewellery products compared to April 2019 of about 19.89 % which led to an increase of 164.28 %. The imports have amounted to USD 23.51 billion.

Oil imports for April 2019 have amounted to USD 10.8 billion which is an increase of 132.36 % on a year-on-year basis. However, when compared to April 2019 there was a decrease of about 6.62 %.

India Exports by Country in Feb-21
India Exports by Country in Feb-21

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Imports Data

The preliminary data from the Ministry of Commerce and Industry has shown that there has also been an increase in the imports of the country. In the month of April, the merchandise imports of India have seen an increase of 165.99 % which is at USD 45.45 billion.

The import of shipments when compared to April 2019 has seen an increase of 7.22 % from USD 42.39 billion. This has resulted in a trade deficit in the country which has increased on a year-on-year basis of 120.34 %.

The increase in the imports was mainly due to the increase in demands for gold and petroleum products as well as electronic goods according to the received data.

Further Estimations

Sharad Kumar Saraf who is the President of the Federation of Indian Export Organizations (FIEO) has conveyed that the impressive growth in exports has made it clear that the order booking position of the exporters of the country is extremely good and it is estimated that the gradual improvement of the situation of the country is expected to increase the exports.

He added that even though there is an increase in exports, the increase in imports and the huge widening of the trade deficit is a concern that should be looked into.

Mahesh Desai who is the chairman of the Engineering and Export Promotion Council of India (EEPC) has said that the recent increase in the Covid-19 cases has increased the risks on the growth and said that the country remains hopeful for the recovery during the year.

He added that the lockdowns and night curfews imposed by various states would create problems regarding to logistics and the workforce in the country.

FAQ

What are the main exports of India?

India's major exports included petroleum products, gems and jewelry, and drug formulations.

What are India's traditional exports?

Gems and Jewelry is at the top exporting commodities from India.

What is the rank of India in exports?

India ranks 19 in countries with most number of exports.

Conclusion

The World Trade Organization (WTO) had changed their projection in regards to global trade volume and has an estimation that there would be an increase in the global trade volume by 8% in the year 2021. This may lead to an increase in the exports in India.

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