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India’s exports to rebound soon

The free fall of India’s exports is likely to end soon. Exports are likely to recover in the second half of this fiscal, led by a combination of factors such as rising commodity prices (especially crude and metals), comfortable position of the rupee against the dollar and other currencies, demand pick up in off shore markets along with the fading base effect.

The assessment is that crude prices and metal prices firming up will help. Also the current exchange rate, or the value of the rupee vis-a-vis other global currencies, is quite healthy. India’s exports have been slipping for the last 17 months, recording a decline of 6.74 per cent in April due to a sharp fall in shipments of petroleum and engineering products amid tepid global demand.

The entire last fiscal also saw a decline in exports. The total merchandise shipments in 2015-16 fell by 15.85 per cent, a five-year low figure. There are fears that if the fall in exports continues it would soon start resulting in job losses and creating a pressure on the current account deficit. In many sectors, volumes have grown, but due to the exchange rate the values do not show a growth. But growth in values is expected to be back soon.