India's Exports Remain Strong Despite Global Disruptions, Says Crisil

India’s goods exports have fared well despite turbulence in the overseas markets, including disruptions on account of geopolitical issues. Upwardly revised global growth forecasts and a better trade volume growth forecast by the World Trade Organisation bode well for India’s exports going ahead, according to Crisil.

India’s push for bilateral free trade agreements and its ambition to grow its manufacturing sector should also support goods exports in the near term.

"That said, given the uneven global growth environment and the persisting geopolitical issues, there could be some hiccups along the way," Crisil said in a May 9 note. "In such a scenario, continuous efforts and government support would be required to keep the export machinery going."

India’s merchandise exports fell a mere 3.1% year-on-year to $437.1 billion in fiscal 2024 from $451.1 billion in fiscal 2023, despite all the challenges.

The performance was largely in sync with global trade. According to the latest data from the United Nations Conference on Trade and Development, global merchandise exports declined 4.6% in 2023, similar to India’s 4.7% decline during the period, thereby keeping India’s share in world exports stable at 1.8%, Crisil said.

"India’s export performance was, in fact, better than developing Asia as a whole, which saw merchandise exports decline a higher 6.8% in 2023," the note said.

On-year, export growth entered a positive zone in August 2023 for the first time in many months, and has since displayed healthy momentum. After an average 13.1% on-year contraction during April-July 2023, exports logged 2.2% growth over August 2023–March 2024. In the last quarter of fiscal 2024, export growth was faster at 4.5%, it said.

A sharp decline in energy prices, especially crude oil prices, was one of the biggest contributors to the fall in India’s overall merchandise export bill. With over 20% share, oil is India’s top export item, and hence, its movement has a large bearing on India’s total export earnings.

The rise in core exports despite the broad-based decline in international commodity prices suggests India was able to ship out a higher volume of most goods, indicating robust demand for Indian goods in international markets, Crisil said.

Among India’s top core exports, organic and inorganic chemicals remained a laggard, declining 3.2% to $29.4 billion in fiscal 2024, from $30.3 billion in the previous fiscal, the note said.

Labour-intensive exports remained in the red. Other than gems and jewellery, exports of a few of India’s large, labour-intensive sectors remained under stress—textile products (mostly ready-made garments, even though some categories such as cotton yarn, fabrics, made-ups and handloom products managed to increase their exports during the fiscal), leather and leather products and marine products, Crisil noted.