India's Merchandise Exports Surge to Record High Amid Global Uncertainties

Despite global uncertainties, India's merchandise exports are showing remarkable resilience, with India recording its highest-ever goods export figure for the current financial year at USD 41.40 billion in the month of February, growing by 12% year-on-year (Y-o-Y). Specifically, in the latter months of the current FY, India’s merchandise exports have shown strong growth after declining for six months. India’s goods exports declined by 9% Y-o-Y for the first six months (April to September), from USD 231 billion in FY23 to USD 211 billion in FY24. However, in the last five months between October to February, India’s merchandise exports have risen by 4% YoY, from USD 117 billion in FY23 to USD 184 billion in FY24.

Export Sector Recovery

The relieving aspect of this export growth is that it is mostly driven by exports from labour-intensive and manufacturing industries such as textiles, handicrafts, and plastics. Certain sectors within textiles (RMG, yarns, and fiber), which experienced a YoY decline of 10% in their exports throughout the current FY, have shown a positive growth of 6% in the month of February. Plastic & Linoleum is another sector where exports were declining by 5% throughout the financial year; however, exports for the month of February have turned positive by 22%. Organic and inorganic chemicals have also shown remarkable recovery in the month of February, with a growth of 33% compared to a 7% decline in the financial year.

With merchandise exports showing improvement in the latter half of the financial year, along with resilience in remittances and a surplus in service trade, India's current account balance should not exceed 1% of its GDP in the worst-case scenario. Additionally, trade figures suggest increasing economic activity in India's manufacturing sector, reflected in the rise of both non-oil and non-gems and jewellery imports and exports.