India’s merchandise export growth stood at 10.3% in August, 2017, which was 3.9% in the previous month. Export of agriculture, engineering goods, chemical industry and electronic goods grew at a healthy rate in FY18 (YTD). As a large number of MSMEs are involved in these sectors, a healthy growth in export indicates that their earnings from export will be robust. The growth in volume will offset the loss caused by a stronger rupee. As per Ministry of Commerce data, MSMEs are outperforming the big players in external market. MSMEs share in India’s overall export has accelerated to 49.8% in FY16 from 42.4% in FY14. This trend shows that share of MSMEs might have exceeded 50% in FY17.
In order to access the performance of external sector, SMERA has analysed the trend of region-wise growth in exports. The figures in table 2 (below) shows that India’s export to Japan, Singapore, Hong Kong, China and the US is very encouraging. These countries along with EU and BRICS account for nearly 70% of India’s exports. Growth rate of these economies are expected to accelerate to nearly 4.5% in 2018 from 1.5% in 2016 (based on IMF’s projection for individual countries). This will accentuate India’s external demand and accelerate the export growth. SMERA finds a strong positive correlation between GDP growth of these selected countries and growth in India’s export.
India’s export to the BRICS nation has recorded a 23.5% growth in FY18 YTD, which is a market of around $14.6 trillion (as on 2016). Despite the fact that the BRICS nations (excluding India) have recorded de-growth of (-) 4.5% and (-) 0.8% in 2015 and 2016 respectively (USD term), SMERA reckons that India’s BRICS partners will grow at around 5-6% between 2017 and 2018. In 2015, India’s major exports to BRICS nations were mineral oil (8% of the sector’s overall export), animal and vegetable fat and oil (34%) sugar (6%) and precious metal (10.5%). Therefore, these sectors are likely to benefit from recovery of the BRICS economy.
Table
-1: Contribution of MSMEs and large players in overall Exports
Financial Year |
Overall Export ($ bn) |
% share of MSME |
% share of large players |
Growth in overall export |
FY14 |
314.90 |
42.42 |
57.58 |
4.91 |
FY15 |
310.10 |
44.76 |
55.24 |
-1.51 |
FY16 |
262.20 |
49.86 |
50.14 |
-15.45 |
FY17 |
276.40 |
* |
* |
5.40 |
Source: Ministry of Commerce, SMERA Knowledge Center
Note: * indicates data for the period is not available
Table
-2: Region-wise growth in export (% YOY)
|
Share (% age) |
FY15 |
FY16 |
FY17 |
FY18* |
US |
16.2 |
8.79 |
-10.61 |
4.36 |
12.86 |
UAE |
10.9 |
8.08 |
-8.3 |
3.16 |
-4.32 |
Hong Kong |
5.3 |
6.47 |
-10.87 |
16.7 |
17.43 |
Singapore |
3.7 |
-21.01 |
-21.13 |
23.83 |
26.3 |
Japan |
1.6 |
-21.25 |
-13.42 |
-17.13 |
23.33 |
China |
3.6 |
-20.29 |
-24.73 |
13.31 |
27.63 |
Europe |
20.3 |
-2.89 |
-10.1 |
6.84 |
3.8 |
Africa |
8.5 |
4.54 |
-23.84 |
-7.48 |
4.38 |
BRICS |
6.7 |
-9.05 |
-33.55 |
7.65 |
23.48 |
World |
100 |
-1.51 |
-15.45 |
5.4 |
8.6 |
Source:
CMIE, SMERA Knowledge Center
Note: ‘*’ is Apr to July
Table -3: Trade performance in 2017 (YTD)
Overall export |
Petroleum |
Non-petro |
Total imp |
Oil |
Gold |
Non-oil non-gold |
|
Jan-17 |
5.17 |
31.57 |
2.29 |
11.7 |
61.53 |
-30.23 |
6.01 |
Feb-17 |
22.68 |
31.97 |
21.73 |
24.86 |
60.6 |
150.98 |
8.14 |
Mar-17 |
27.12 |
69.81 |
22.61 |
45.15 |
101.29 |
269.76 |
19.96 |
Apr-17 |
17.92 |
41.68 |
15.28 |
47.69 |
28.76 |
188.5 |
42.48 |
May-17 |
7.2 |
20.64 |
5.79 |
34.66 |
28.32 |
256.98 |
20.3 |
Jun-17 |
4.07 |
2.9 |
4.22 |
18.19 |
11.47 |
80.48 |
16.31 |
Jul-17 |
3.94 |
20.26 |
1.81 |
15.42 |
15.02 |
101.17 |
11.03 |
Aug-17 |
10.29 |
36.56 |
6.86 |
21.02 |
14.22 |
72.85 |
20.15 |