The Export-Import Bank of India (India Exim Bank) has projected a record-breaking $111.7 billion in merchandise exports for the second quarter of the current fiscal year (Q2 FY25). This represents a 4.2% year-on-year growth, with merchandise exports reaching $109.11 billion in April-June. The projected non-oil exports are expected to contribute $89.8 billion, indicating a 6.26% increase year-on-year. This optimistic outlook highlights the continued positive trajectory of India’s trade performance amidst robust economic activity.
The optimistic forecast is rooted in the sustained momentum witnessed in India’s manufacturing and services sectors. This positive trend is further bolstered by government initiatives like ‘Make in India’ and ‘Atmanirbhar Bharat’. These programs aim to reduce import dependency and strengthen domestic production, contributing to the resilience of India’s manufacturing sector. Global factors also play a pivotal role in this positive outlook. Expectations of global monetary easing and improving demand in key trading partners create a favorable environment for India’s exports.
According to the World Trade Organization (WTO), global merchandise trade volume is anticipated to grow by 2.5% in 2024, offering a supportive backdrop for India’s export activities. However, the India Exim Bank report acknowledges that certain risks persist. Uncertain economic prospects in advanced economies, geopolitical tensions, and ongoing conflicts in West Asia could pose significant challenges to India’s export growth. Additionally, global supply chain disruptions and deepening geo-economic fragmentation might hinder export growth.
India’s merchandise trade deficit, which reached a seven-month high in May, showed signs of narrowing in June. The deficit stood at $20.98 billion in June, a decrease from $23.78 billion in May but slightly higher than the $19.1 billion recorded in April. Despite this, the June figure exceeded analyst expectations, with a Reuters poll predicting a $21.5 billion deficit.
The volatility in global oil prices and fluctuating demand in major economies add further uncertainty to the forecast. Despite these challenges, India’s trade performance has demonstrated a robust post-pandemic recovery. Merchandise exports surpassed $400 billion for the first time in FY24, reaching a record $433.09 billion. The commerce ministry continues to proactively identify new markets and diversify its export base, with a focus on emerging economies in Africa, Latin America, and Southeast Asia.
India Exim Bank’s projections are based on its Export Leading Index (ELI) model, which tracks various economic indicators to provide insights into future export trends. The next forecast, covering the third quarter of FY25 (October-December), is expected to be released in the first fortnight of November.
