India exports contract 0.3% YoY in Feb’21

* Preliminary data from the Ministry of Commerce reveals exports fell 0.3% YoY to USD27.7b in Feb’21, against growth of 7% YoY in imports to USD40.6b during the month (Exhibit 1). Consequently, India’s foreign trade deficit stood higher at USD12.9b in Feb’21 vis-à-vis USD10.2b a year ago (Exhibit 2).

* On a year-to-date basis, exports declined 12.2% YoY to USD256.2b, while imports declined faster by 22.9% YoY to USD341.7b. Trade deficit, therefore, stood at USD85.7b during Apr’20–Feb’21, the lowest in 13 years (Exhibits 3 and 4).

* Petroleum exports contracted at the slowest pace in five months of 26.1% YoY in Feb’21, and gems & jewelry contracted 11.2% YoY. Therefore, exports excl. oil are expected to have actually grown 3.3% YoY and exports excl. gems & jewelry grew an estimated 1.1% YoY in Feb’21. Moreover, total exports ex-oil and gems & jewelry grew 5.4% YoY in Feb’21, against growth of 13.4% YoY in Jan’21.

* The major non-oil, non-gems & jewelry export items that posted decline in Feb’21 comprise: engineering goods (-2.6% YoY), leather and leather products (-21.6% YoY), readymade garments of all textiles (-8.5% YoY), electronic goods (-5.8% YoY), fruits and vegetables (-4% YoY), man-made yarn/fabrics/made-ups, etc. (-4% YoY), tea (-2.5% YoY), coffee (-0.7% YoY), and marine products (-0.3% YoY).

* 16.3% YoY growth in non-oil imports (highest growth in 30 months) was the major reason for an uptick in total imports in Feb’21; oil imports, on the other hand, declined 16.4% YoY during the month. Gold imports surged 124% YoY to USD5.3b, excluding which total imports are estimated to have actually edged down 0.8% YoY in Feb’21.

* Chemical material & products (45.5% YoY), electronic goods (37.8% YoY), organic & inorganic chemicals (37.6% YoY), artificial resin, plastic materials, etc. (25.1% YoY), iron & steel (23.4% YoY), textile yarn fabric, made-up articles, etc. (21.4% YoY), wood & wood products (18.56%), medicinal & pharmaceutical products (15.4% YoY), and non-ferrous metals (12.4% YoY), among others, were other imported items that posted growth in Feb’21.

* Overall, we continue to believe India’s current account surplus could reduce to 0.3% of GDP in 3QFY21. In fact, we expect the current account to remain in surplus in all of the four quarters of FY21 and record surplus of ~1.3% of GDP for the fullyear FY21.

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