Data for the first half of 2021-22 indicates that Indian exports are back to the 2019-20 levels. The exports increased to USD 198.2 billion during the first half of 2021-22 compared to USD 125.6 billion during the same period in 2020-21, and USD 159.1 billion in 2019-20.
In an earlier story, we reviewed the trends in imports to India from the leading import trade partners, excluding China. In the case of most of the countries, the value of imports fell during 2020-21 compared to the pre-COVID year of 2019-20. However, the imports during the first half of 2021-22 are back to the pre-pandemic levels.
In the 2nd story of this two-part series, we analyse the impact on Indian exports due to the COVID-19 pandemic i.e., during 2020-21 and the first half of 2021-22.
Major fall in exports to UAE during 2020-21
The overall exports of India during 2020-21 were worth USD 291.8 billion, which is a nearly 7% fall compared to 2019-20 when it was USD 313.3 billion. While the COVID-19 pandemic could be cited as a reason, it has to be noted that there was a decline in the exports even during 2019-20 compared to 2018-19, when it was USD 330 billion.
In an earlier story, we have highlighted that in contrast to the overall trend of exports, the exports to China have increased during 2020-21. Here is a snapshot of the other leading export partners.
- The USA is India’s largest export partner with around 17% of the total exports. Compared to the overall fall in exports, the decline in the case of the USA is lower. The value of exports in 2020-21 was USD 51.62 billion compared to USD 53 billion in 2019-20 i.e., a fall of around 2.8%
- The decline in overall exports during 2020-21 can be largely attributed to the fall in exports to UAE. The overall value of Indian exports to the UAE fell by 42%. The value of exports in 2020-21 was USD 16.67 billion compared to USD 28.85 billion in 2019-20. UAE is the second-largest export partner.
- Like in the case of China, there is an increase in exports to Bangladesh. Prior to the pandemic, the value of exports to Bangladesh was USD 8.2 billion in 2019-20 which increase to USD 9.69 billion in 2020-21 i.e., an increase of 18 %.
- Australia is not among India’s leading export destinations but is among the few countries where the value of Indian exports increased in 2020-21. Indonesia also witnessed an increase in the value of exports from India.
- Apart from UAE, another country that witnessed a major decline in exports from India is the Netherlands. The exports fell from USD 8.3 billion in 2019-20 to USD 6.4 billion in 2020-21 i.e., a fall of around 23%.
- While not among the leading export destinations in terms of volume, the exports to Turkey and Iran also witnessed a major fall. The value of exports fell by more than 20% to Turkey and around 47% in the case of Iran in 2020-21. In the earlier story, we have highlighted the declining trend in imports from Iran. The exports data confirms that there is a decline in overall trade with Iran, with reasons beyond COVID-19.
Exports during the first half of 2021-22 crossed 2019-20 levels for most Countries
As per the Export Import Databank’s monthly data, the total value of exports by the end of September 2021 i.e., the first half of 2021-22 was USD 198.26 billion. This is an increase of nearly 58% compared to the same period in 2020-21. Even compared to the pre-pandemic year of 2019-20, there is an increase of 24.5% in India’s exports in the first half of 2021-22.
- The USA is a key driver in the increase of exports during the first half of 2021-22. The value of exports to the USA during the period is USD 36.08 billion, 65% higher than the same period in 2020-21 and around 35% higher than in 2019-20.
- Data suggests that exports to UAE, which witnessed a major fall in 2020-21, also recovered in the first half of 2021-22 with a value of USD 12.94 billion, around 92.5% more than the same period in 2020-21. However, despite this increase, the value of exports is still less than the first half of 2019-20. Similar is the scenario that exists in the case of Hong Kong.
- The overall exports to Bangladesh increased by 88% in the first half of 2021-22 compared to the same period in 2020-21.
- Higher growth is witnessed in the case of most other leading export destinations during the first half of 2021-22 compared to the same period in 2020-21 although the value exports to these countries are much lower than that of the USA & UAE.
Fall in exports of Petroleum Oils along with Pearls, Precious stones & metals in 2020-21
Distilled products from Crude petroleum i.e., Mineral Oils & Petroleum Oils form the largest constituent of India’s exports. The exports of distilled petroleum products were valued at USD 26.9 billion in 2020-21 which is around 37% less than that of 2019-20. These products also form a major part of the exports to the UAE. The fall in the exports of these products is the reason for a significant decrease in exports to UAE.
Another major group of products that India exports to the UAE is Pearls, Precious stones & metals. Their overall export value fell from USD 36 billion in 2019-20 to USD 26 billion in 2020-21. This has also contributed to the fall of exports to the UAE. These two groups of products have also contributed towards the fall in exports to other countries, including the USA.
The fall in the export of distilled petroleum products has also contributed to the major fall in exports to the Netherlands, as noted earlier. Meanwhile, the exports of pharmaceutical products have increased in 2020-21 by about 19 %. These exports have increased across all the countries, with the USA accounting for the highest value of exports.
Although there is an increase in Iron & Steel, these exports were primarily to China. There is also an increase in exports of Iron & Steel to Indonesia.
A substantial increase in the export of Cereals to Bangladesh in 2020-21 has contributed towards the increase in exports to that country, despite a fall in exports of most of the other traditional exports. During 2020-21, there is an increase in the export of cereals to a few other African and Asian countries also. India exported around USD 1 billion worth of Cereals to Bangladesh in 2020-21, compared to only about USD 40 million in 2019-20.
Just as was the case for Imports, trends indicate that the increase in exports during the first half of 2021-22 to the pre-pandemic levels is majorly due to the resumption in the export of major products to the earlier levels. Few of the products like Cereals have continued their increasing trend even during the first half of 2021-22, thereby contributing towards the overall increase in the exports.
Impact of India’s trade balance is still unclear
India’s imports increased by around 80% during the first half of 2021-22 compared to that of the same period in 2020-21. However, compared to the pre-pandemic year i.e., the first half of 2019-20, imports grew by around 10%.
In comparison, the exports during the first half of 2021-22 grew by around 57% compared to 2020-21 while in comparison to 2019-20, they grew by around 24.5%. India has an unfavourable trade balance with the value of imports higher than that of the value of exports. It remains to be seen if the growth in exports & imports sustains at the same pace. The impact on India’s trade balance will not be clear unless trade across the world resumes to normal levels.
It also has to be noted that the increase in exports of products like Cereals & Pharmaceuticals might have been necessitated due to the pandemic. While this increasing trend is continuing even in 2021-22, whether the demand will sustain in the longer term is not clear.
Apart from these specific cases, the trends during the first half of 2021-22 indicate the resumption of trade in the case of important products (by value) to normal levels. There is also not much change in the source or destination countries for major import/export products. Except for the disruption caused due to the pandemic, there has not been a major change either in the case of products or countries.
Featured Image: Indian exports back to the Pre-Pandemic levels