Home » India’s exports to major destinations contract in Oct 2022: CareEdge

India’s exports to major destinations contract in Oct 2022: CareEdge

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India’s exports to major destinations recorded a contraction in October 2022, according to the Indian rating agency CareEdge Ratings. The country’s export of textiles recorded a decline of 25 per cent year-on-year (YoY) during the period from September to November 2022, worsening from a contraction of 7.6 per cent in the previous three months.

Exports of ready-made garments contracted by 10.3 per cent during September–November 2022 following a healthy growth of 13.4 per cent in the previous three months. While the crisis in the major readymade garment exporting nations (Sri Lanka, Myanmar, and Pakistan) could result in the shifting of export orders to India, Bangladesh and Vietnam, slower growth in key markets of the US and European Union (EU) remain a challenge.

The major destination for Indian exports, North America, recorded a notable fall in exports by 20 per cent YoY in October, while exports to EU contracted by 2.5 per cent YoY in October. North America and EU account for 36 per cent of India’s overall exports, as a result, the slowdown in these markets will have an adverse impact on India's exports, as per CareEdge Ratings.

Trade tensions between the two largest economies of the world—the US and China—have also led to trade diversification, which is a positive development for emerging and developing markets. India, however, has not been able to gain much from these diversifications, as reflected by its sticky share in global trade. Its exports of goods co-move with the world trade. Based on the annual data on exports of goods growth from the World Bank, after recording a healthy growth of 15.5 per cent annually during 2002-2011, India’s exports growth fell sharply to about 4.1 per cent a year during 2012-2021.

India’s manufacturing sector which had already been reeling under pressure due to high raw material prices in the first half (H1) of 2022, is now feeling the pain of lower external demand. The manufacturing sector gross value added (GVA) contraction of 4.3 per cent in the second quarter (Q2) of financial year 2023 (FY23) was worse than expected. Lower external demand is also getting reflected in a sharp contraction of 4 per cent in the Index of industrial production (IIP) data for October 2022.

As textiles and garments is one of the most export-intensive sectors in overall manufacturing, it will likely be hit majorly amid a global slowdown in world trade. Textile sector, with a share of 9 per cent in manufacturing output, has an export intensity of 26 per cent.

The country’s overall imports increased by 10.2 per cent in the last three months (September-November) moderating from 46 per cent in the previous three months.

Fibre2Fashion News Desk (DP)

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