India’s outbound shipments rose for the first time in seven months with merchandise exports registering a 6 per cent growth in September higher than the estimated 5.3 per cent in provisional data released earlier. The growth was primarily driven by an increase in demand for engineering goods, petroleum products, pharmaceuticals and ready-made garments. India’s exports rose to $27.6 billion, while imports contracted 19.6 per cent to $30.3 billion, resulting in a trade deficit of $2.7 billion, according to data released by the commerce ministry. In the six months ended 30 September, exports fell 21.3 per cent to $125.3 billion, while imports contracted 40.1 per cent to $148.7 billion, creating a trade deficit of $23.4 billion.

India’s merchandise trade was weakening even before the covid-19 outbreak due to declining external demand. In 13 of the past 15 months, starting June 2019, the country’s exports were in the negative. Since March 2020, both exports and imports started falling in high double digits, temporarily leading to a trade surplus in June for the first time in 18 years. Data compiled by the World Trade Organization (WTO) showed global merchandise trade declined by 21 per cent in the June quarter. According to the WTO, global volumes of merchandise trade is set to decline 9.2 per cent in 2020, followed by a 7.2 per cent rise in 2021. In April, the trade body had projected global merchandise trade to drop by 13-32 per cent in 2020 because of the covid-19 crisis.

India’s economy contracted 23.9 per cent in the June quarter, hit by the double whammy of a demand contraction and supply shock because of a countrywide lockdown, considered to be the strictest in the world to contain the spread of the novel coronavirus. The International Monetary Fund (IMF) projected India’s economy to contract 10.3 per cent in FY21, while the Reserve Bank of India’s estimates put it at -9.5 per cent.