India's merchandise exports in August slumped by over 12% on a year-on-year basis, official data showed on Tuesday. The country shipped out merchandise worth $22.70 billion from $25.99 billion exported during the like period of the previous year.
The data showed that contraction caused by the Covid-19 pandemic widened during August at (-) 12.66% from (-) 10.12% in July and (-) 12.41% in June.
In terms of sequential movement, the country's merchandise exports in July stood at $23.64 billion.
"Non-petroleum and non-gems and jewellery exports in August 2020 were $18.95 billion, as compared to $19.57 billion in August 2019, registering a negative growth of (-) 3.17%," the Ministry of Commerce and Industry said in a statement.
Similarly, India's imports declined, falling (-) 26.04% to $29.47 billion in August from $39.85 billion reported for the corresponding month of 2019.
In July, imports declined by (-) 28.40% to $28.47 billion in July from $39.76 billion reported for the corresponding month of 2019.
"Oil imports in August 2020 were $6.42 billion which was 41.62% lower in Dollar terms compared to $11 billion in August 2019," the statement said.
"Non-oil imports in August 2020 were estimated at $23.05 billion which was 20.10% lower in Dollar terms compared to $28.85 billion in August 2019."
Besides, the non-oil and non-gold imports were $19.35 billion in August 2020, recording a negative growth of (-) 29.61%, as compared to non-oil and non-gold imports of $27.49 billion in August 2019.
Consequently, India's trade deficit narrowed to $6.77 billion on a year-on-year basis in August from $13.86 billion reported for the corresponding month of last year.
The trade deficit had narrowed to $4.83 billion on a year-on-year basis in July from $13.43 billion reported for the like period of 2019.
"Given the overall decline in global demand, the 12.7% YoY decline in merchandise exports is not surprising and reflects the challenges that Indian exporters will continue to face in stepping up its shipment levels," said Suman Chowdhury, Chief Analytical Officer, Acuite Ratings and Research.
"On the other hand, the recovery in imports have also slowed down in August with a MoM growth of only 3.5% reflecting the slower revival in industrial demand which largely follows from the prolonged impact of the pandemic."
Industry body EEPC India Chairman Mahesh Desai said: "Continuous fall in exports in August, clearly shows the grave challenges of the global marketplace, which is bearing the huge impact of never-seen-before health crisis, escalating trade war between world's two largest economies and the rising geo-political risks."
"The engineering exports, the largest contributor to the merchandise export basket have seen a significant fall of 7.69% in August 2020, making it imperative for the government to extend its helping hand."
ICRA Principal Economist Aditi Nayar said: "The sequential rise in the merchandise trade deficit to $6.8 billion in August 2020 from $4.8 billion in July 2020, was entirely driven by a surge in gold imports, reflecting pent-up demand as well as elevated prices."
"With consumption trends likely to adjust to a new normal with the further reopening of the Indian economy, imports of gold may increase further in the run up to the festive and marriage season."