September recovery proves short-lived as exports fall 5% in Oct

Exports at $27.58 billion in September had almost reached the pre-Covid level of $27.65 billion.
The recovery in exports seen in September was short-lived as outbound shipments contracted by 5.12 per cent in October as the second wave of Covid-19 hit Europe and the US continued to reel from the pandemic's impact. Almost all high value items – petroleum products, gems and jewellery, engineering goods or electronic goods — contracted except for pharmaceuticals.

Exports had risen five per cent in September, raising hopes of a recovery in the second half of the fiscal. At $27.58 billion, exports in September had almost reached the pre-Covid level of $27.65 billion. However, it fell again to $24.89 billion in October.

Imports on the other hand continued to fall for the eighth consecutive month in October, declining by 11.53 per cent, even as the rate of decline reduced. The decline in imports has consistently moderated since April, when it had plunged by 58.65 per cent. Imports contracted by 19.6 per cent in September.

The trade deficit rose again to a nine-month high of $11.75 billion in October from $2.72 billion in the previous month.

Non-oil, non-gold imports fell by 4.9 per cent in October. However, the rate of fall reduced from 12.63 per cent in September. This shows that there has been some improvement in domestic demand. In fact, the index of industrial production (IIP) rose for the first time in seven months in September, even though it was only by 0.2 per cent.

Exports were down 19.02 per cent during the first eight months of the current financial year, while imports fell by 36.28 per cent. Trade deficit stood at $32.16 billion during the period, almost a third of $100.6 billion in the corresponding period of the previous financial year.


Exports of petroleum products declined by 52 per cent in October, while gems and jewellery were down by 21 per cent. Electronics goods declined by nine per cent and engineering goods by four per cent in the month.

“The renewed lockdowns in some advanced economies may suppress the level of non-oil exports in the ongoing month,” said Aditi Nayar, principal economist at ICRA.

Mahesh Desai, chairman of Engineering Export Promotion Council India, said Indian exports face a tough winter with the second wave of Covid hitting Europe and the US reeling under the pandemic.

Meanwhile, services exports declined 1.43 per cent in September against 9.88 per cent the previous month. Imports on the other hand declined 8.66 per cent against 20.06 per cent.

“The sharp narrowing in the year-on-year contraction in services exports and imports is encouraging, signalling a return to normalisation,” Nayar said.

Deficit in services trade stood at $7.15 billion in September against $6.84 billion in August. 

“As economic recovery strengthens, we expect the current account surplus to decline substantially in Q3 of FY21, from the $20 billion recorded in Q1 and $12-14 billion expected for Q2,” Nayar said.



Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel