A sustained recovery in global trade and demand from key external markets like the US and the European Union in product categories such as textiles and garments have helped boost India’s exports, which recorded the sixth consecutive month of growth in August.
India’s textile and apparel exports to the United States, its single largest market, were up 55 per cent in the first seven months of 2021. This is the fastest pace of growth among the top five countries exporting textile and garments to the US.
A sustained recovery in global trade and demand from key external markets like the US and the European Union in product categories such as textiles and garments have helped boost India’s exports, which recorded the sixth consecutive month of growth in August.
While India’s cumulative merchandise shipments have been helped by a spike in petroleum exports, the textile and garments sector has been a major product category recording a surge in value terms, alongside the gems and jewellery sector, engineering goods and cereals.
In the high-margin global export market for clothing and apparel, India has been edged out by competitors such as Vietnam, Indonesia and Bangladesh consistently over the last 10 years, which have been growing much faster in supplies to key markets such as the US and the EU. The trend so far in 2021 marks a reversal of this trend — India’s exports to the US surged 55 per cent during January-July 2021, higher than Vietnam’s 18 per cent, Bangladesh’s 29 per cent, China’s 28 per cent and Mexico’s 31 per cent.
One of the reasons cited by trade analysts is the higher export order books being reported by Indian garment exporters, alongside buoyant orders in the home textile segment where India has traditionally been a strong player. Less severe lockdown restrictions in the country’s export hubs, especially in southern states such as Tamil Nadu and Karnataka, during the second Covid-19 wave also ensured continuing operations of units, alongside some degree of diversion of products from the sluggish domestic market to exports.
While officials at the Ministry of Commerce and Industry have maintained that duty remission schemes such as RoDTEP (Remission of Duties and Taxes on Exported Products) and RoSCTL (Rebate of State and Central Taxes and Levies) have helped free the financial headroom available for exporters, players in the garments and textiles sector have flagged concerns over delayed operationalisation of tax rebate schemes and lower-than-expected benefits. Challenges on the availability of containers and high shipping costs have been cited by both exporters and analysts as areas of concern in the near term.
From a macroeconomic perspective, rising exports are a positive sign for India’s economy as it recovers from the economic shock induced by the second wave of the Covid pandemic, which has differentially blunted three out of the four engines of GDP growth — private consumption, investments and government consumption.
Exports have been a silver lining, even as there are looming headwinds, including runaway freight rates and the growing shipping container shortage, alongside the possibility of global central banks putting a stop to their quantitative easing policy that could, in effect, progressively temper consumer demand in these markets.
India’s goods exports had touched $33.14 billion in August, up 45 per cent on-year, according to provisional data released by the Commerce and Industry ministry Thursday.
The growth was, in part, attributed to a low base in August 2020 due to disruption caused by the first wave of Covid-19. The base effect is, however, tapering off, with the robust August 2021 export numbers coming in lower on a sequential basis as compared to the all-time high of $35.17 billion that outbound shipment hit in July — a drop of nearly $2 billion. (The Indian Express)
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