India finally registered its first trade surplus in 18 years in June 2020!
And what’s notable is that textile and apparel industry had a significant role to play in this.
The Ministry of Commerce and Industry on Wednesday said that the month of June saw the country post a trade surplus of nearly US $ 790 million, with imports being US $ 21.1 billion and exports touching US $ 21.9 billion.
The sluggish exports were to a great extent driven by lower sales of gems and jewellery (-50.06 per cent) and leather/leather products (-40.47 per cent), which are important export components in India’s trade basket.
The exports of many products fell drastically – but what’s noteworthy is that the export fall of apparels and textiles is not as big as any of the aforementioned sectors. While the export of ready-made garments fell by -34.84 per cent, that of manmade yarn and fabrics dropped by -31.98 per cent.
This has, to a great extent, helped control the export slump.
Also, at the same time we imported less during the period, which tilted the trade deficit in the country’s favour. The imports associated with the textile sector (cotton, fabrics and made-ups) also fell significantly – as much as electronics, iron and steel and transport, contributing to the import reduction.
Notably, the imports have fallen by 47.59 per cent to register US $ 21.1 billion.
It was back in January 2002 that India had witnessed a trade surplus of US $ 10 million, with exports of US $ 4.3 billion.
The relative improvement in exports is an encouraging sign for India’s growth prospects; however, the persistent weakness in imports is a reflection of selective sectoral lockdowns, lower commodity prices and weak underlying demand, said Rahul Bajoria, Chief India Economist, at Barclays.
It will be interesting to see the developments over the course of next few months.
