Smart increase in merchandise exports and imports

by Mahesh Vyas

After several years of anemic growth rates, exports seem poised for a recovery in 2017-18. Exports had either declined or grown in single digits in the past five years, i.e. since 2012-13. In contrast, during the first eight months of the current fiscal, exports grew by a promising 12.1 per cent. Year-on-year growth rates during the months have been volatile but, the cumulative growth looks better than in the past.

The performance is impressive as it comes in the background of a strengthening rupee. During April-November 2017, the Indian rupee on an average was Rs.64.52 per USD, which is 3.9 per cent stronger than the Rs.67.01 per USD average exchange rate during April-November 2016. The Indian rupee was similarly 7.1 per cent stronger against the Pound Sterling, 0.9 per cent stronger against the Euro and 10 per cent stronger against the Japanese Yen.

Trade data released last week show that exports grew by a handsome 30.6 per cent y-o-y, in November 2017. This impressive growth allays fears that GST could derail exports growth this year as well. Exporters have been affected by delays in refunds of tax credits and this has hurt their cash flow management. The fear was that liquidity problems caused by GST would impact export growth. In October 2017, exports had declined 1.3 per cent y-o-y.

Petroleum products exports having been doing quite well this fiscal. During November, their exports were 47.7 per cent higher than they were a year ago. Cumulatively, they grew by 27.2 per cent during April-November 2017 over the corresponding period of 2016.

But, the performance of petroleum products does not reflect the effects of the twin shocks of demonetisation and GST as the industry’s exports are unaffected by both. The effects of the twin shocks is best seen in the performance of non-petroleum products. There was some cause for worry as these exports had declined by 3.3 per cent during October.

In November, non-petroleum exports grew by a robust 28.2 per cent, y-o-y. Engineering goods, chemicals, marine products, gems & jewellery and plastic products powered this growth. Engineering goods and inorganic/organic/agro chemicals grew by 44 per cent and 54 per cent, respectively. Exports of both groups have been performing quite well in the recent past.

Gems & jewellery has been undergoing a very volatile trend in exports over the past year or so. Exports in November 2017 were modestly higher than they were in October but, they measured a substantial 33 per cent increase over the performance a year ago when they had fallen very sharply (by 42 per cent) following demonetisation. So, the impressive y-o-y growth of November 2017 largely reflects this low base of November 2016. Gems & jewellery exports tanked again during June, July and August and then again in October.

Exports of drugs & pharmaceuticals and readymade garments have been similarly volatile over the past year. Both registered a sharp fall in exports in October and recovered a bit in November. While drugs & pharmaceuticals recorded a 13.4 per cent y-o-y growth, readymade garments continued to remain in the negative zone with exports being 10 per cent lower compared to a year ago.

Like exports, imports too have grown handsomely in 2017-18. These were up 21.9 per cent y-o-y, during April-November 2017. Petroleum imports grew 22.7 per cent, gold & silver grew by 49.4 per cent and non-petroleum and non- gold & silver imports grew by 18.9 per cent. This is a reversal of contracting imports witnessed in the previous two fiscal years.

Robust growth in non-petroleum and non-gold & silver imports indicates some areas of robust demand in the Indian economy. For example, import of electronics grew by 25 per cent y-o-y in November 2017. Electronic imports growth has surged in recent months as these ranged mostly between 20 and 40 per cent y-o-y over the past year or so. The government has sought to discourage these imports by increasing import duties on a range of these products. According to an announcement on December 14, duties have been raised from 10 per cent to 15 or 20 per cent. Electronics accounts for nearly 10 per cent of all imports and over 14 per cent of all non-petroleum imports.

At the same time, imports of transport equipment fell by 8.4 per cent y-o-y in November 2017. In fact, y-o-y, import of transport equipment has been in the red since March 2017. Further, during the past three months, September through November, gold & silver imports have been declining.

By the end of November, the trade deficit reached Rs.100 billion. This is close to the trade deficit of the entire fiscal 2016-17 that stood at Rs.106 billion. Given that over ten billion rupees worth of deficit is recorded every month, fiscal 2017-18 is likely to end with a trade deficit close to Rs.150 billion.

CMIE STATISTICS
Unemployment Rate
Per cent
6.0 -0.1
Consumer Sentiments Index
Base September-December 2015
93.3 0.0
Consumer Expectations Index
Base September-December 2015
93.3 -0.3
Current Economic Conditions Index
Base September-December 2015
93.2 +0.5
Quarterly CapeEx Aggregates
(Rs.trillion) Jun 17 Sep 17 Dec 17 Mar 18
New projects 2.33 1.38 1.23 2.16
Completed projects 0.87 1.21 1.02 1.07
Stalled projects 2.67 0.69 0.93 3.34
Revived projects 0.23 0.34 0.23 0.14
Implementation stalled projects 0.73 0.73 0.58 1.05
Updated on: 27 Apr 2018 9:20AM
Quarterly Financials of Listed Companies
(% change) Jun 17 Sep 17 Dec 17 Mar 18
All listed Companies
 Income 9.6 7.9 11.9 9.6
 Expenses 9.9 9.0 12.9 13.1
 Net profit -19.9 -18.1 -13.9 -12.1
 PAT margin (%) 5.3 5.5 4.9 11.2
 Count of Cos. 4,483 4,470 4,433 119
Non-financial Companies
 Income 10.2 8.2 13.2 6.6
 Expenses 10.5 8.2 12.3 7.9
 Net profit -25.1 -6.0 12.7 -1.1
 PAT margin (%) 5.2 6.2 6.4 12.6
 Net fixed assets 9.2 10.1
 Current assets 78.7 6.6
 Current liabilities 11.0 20.8
 Borrowings 10.4 4.3
 Reserves & surplus 5.2 0.2
 Count of Cos. 3,461 3,444 3,430 86
Numbers are net of P&E
Updated on: 27 Apr 2018 9:20AM
Annual Financials of All Companies
(% change) FY15 FY16 FY17 FY18
All Companies
 Income 5.5 1.5 5.1 1.6
 Expenses 5.6 1.7 5.1 0.7
 Net profit 0.0 -10.3 23.7 9.2
 PAT margin (%) 3.1 2.8 3.6 8.3
 Assets 9.5 10.0 6.9 3.3
 Net worth 8.5 11.4 6.0 2.8
 RONW (%) 5.8 4.9 5.9 12.7
 Count of Cos. 25,647 23,668 20,755 19
Non-financial Companies
 Income 4.7 0.6 4.7 1.5
 Expenses 4.9 0.0 5.2 0.6
 Net profit -8.6 18.4 18.0 10.7
 PAT margin (%) 2.0 2.5 3.1 7.4
 Net fixed assets 13.3 17.3 5.4 4.4
 Net worth 6.9 12.0 4.4 2.9
 RONW (%) 4.6 5.1 6.0 11.5
 Debt / Equity (times) 1.1 1.1 1.0 0.2
 Interest cover (times) 1.9 1.9 2.1 11.8
 Net working capital cycle (days) 66 65 62 38
 Count of Cos. 20,897 19,807 17,287 17
Numbers are net of P&E
Updated on: 18 Apr 2018 11:50AM

Time series available from 1990 onwards