Acuité Ratings & Research on Imports & Exports Data March 2020

Karan Mehrishi, Lead Economist at Acuité Ratings & Research on the imports and exports data for March 2020:

"India's structural weakness in merchandise exports has further aggravated in March 2020 due to the Covid led large scale disruption in the global supply chains and cancellation of orders. While merchandise exports slipped yoy in March by 34.6%, it has contracted by 4.78% in dollar terms in FY20 as a whole. There was a broad based decline observed across all product export groups which can also be partly be attributed to the pan India lockdown towards the end of March. However, the trade deficit is estimated to have improved to USD 70.2 billion for FY20 i.e. 2.3% of GDP as compared to USD 103.3 billion in FY19 as a result of both steady performance in services exports (IT/ITES) and also a drop in imports to the extent of 9.1% during the year. Clearly, the decline in exports would be far more severe in the month of April-May given that the lockdown will continue throughout the month but it will also be partly offset by the sharp decline in imports largely due to lower volumes and prices of oil. Going ahead in FY21, the exporters in some sectors may get access to newer markets as an alternative source of supply vis-à-vis China but their ability to capitalise on the potential opportunities will be dependent on the revival of supply chains."

Source : Equity Bulls

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