India’s FY16 exports likely to remain flat at $310 billion: Assocham

08 Jun 2015


India is expected to import goods worth around $440-450 billion in the current year while its exports may see flat or no growth scenario, staying below the previous fiscal level of $310 in FY16, says the Associated Chambers of Commerce and Industry of India (Assocham).

Trade deficit during the current fiscal could thus exceed $140 billion, according to Assocham.

India's exports in the current financial year are likely to stay flat at the 2014-15 level of $310 billion or may even decline in the face of slow global demand for merchandise, according to an assessment made by industry body Assocham.

Exports, which have seen a weak trend since July 2014, contracted since January this year right through April. ''In fact, generally the last quarter of the fiscal turns out to be much better to make up for the previous quarters. However, it has been a different situation in the last quarter of fiscal 2014-15 and the first month of 2015-16,'' the Assocham paper said.

Engineering products, gems and jewellery and petroleum products are the biggest contributors to the overall export basket in terms of value. In the previous fiscal, while engineering goods registered a modest increase, the other two segments have been witnessing sharp drop.

The trend is likely to continue at least for gems and jewellery, while the situation may stabilise a little for the petroleum segment since after seeing a sharp fall, crude oil prices have stopped seeing much of a drop. Petroleum exports are related to the prices of crude oil.

According to the Assocham paper, US economic growth has not firmed up in the first quarter of 2015 when its economy had contracted.

A stronger dollar hit US exports. In the Euro zone, it was marginally better in Q1 but it is quite unsettled. The emerging market pack remains in a challenging situation with China adding to the major woes.

''Overall the trade confidence is quite muted,'' Assocham secretary general D S Rawat said, impressing on the government to move fast on improving ease of doing business and reduce the transaction costs for the Indian shipments.
Going forward, merchandise exports are likely to average around $22-25 billion a month till the end of second quarter of the current fiscal. Shipments would improve thereafter, but the upside remains limited, the paper cautioned.

However, the impact of the flat or some drop in exports would not have major impact on the trade balance since imports too would remain muted because of the poor consumption demand in the domestic economy. Imports would remain between $440-450 billion in the current fiscal - more or less in sync with the previous year.

''Assocham agrees with the assessment of the RBI which had stated in its credit policy that the net exports are, unlikely to contribute as much to growth as did in the past,'' the paper said.

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