Exports fall sharply in October

Preliminary monthly trade data, usually released the first week of the following month, exclude data from a few segments and are usually revised upwards when the final estimates are released two weeks later. Data for some special economic zones (SEZs) and ports without electronic data interchange (EDI) are added before the final estimates are released.

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This month, without any public explanation, the Center did not release the preliminary data. A third person who spoke on condition of anonymity said there was some unease with the practice in some parts of government, as preliminary data is reported prominently while revised data, usually a stronger figure , receive relatively less publicity, creating confusion in the public mind. But it’s unclear whether the practice, launched in October 2020 to provide higher frequency indicators on a key aspect of the economy, has been discontinued or just temporarily halted. A Press Trust of India report last week said the government had decided to suppress the publication of preliminary data, attributing the information to anonymous people.

The weak preliminary trade figures were discussed at a meeting between Trade Minister Piyush Goyal and export bodies last week. Without citing a figure, the minister sought information on how the low numbers could be resolved, said a person involved in the discussions.

A Commerce Department spokesperson did not respond to requests for comment.

Final estimates for October will likely be released this week and should show a tighter contraction in year-over-year growth compared to preliminary data.

Most sectors, including engineering and ready-to-wear, saw sharp double-digit declines in exports, the previously quoted officials said.

Restrictions on exports of wheat, certain varieties of rice and special taxes aimed at discouraging the sale of steel, iron ore and fuels abroad, as well as a slowdown in demand in the main export markets. export, contributed to the decline.

At the meeting with the minister, exporters suggested measures including increasing the export payment window for buyers from the current nine months to 15 months and restoring the higher interest subsidy rate of 5 % for small manufacturers. “Preliminary data shows a double-digit decline, but that will see a revision when we release final data in a few days, which will capture the details of some of the SEZs and non-EDI port data, which comes into play a bit late” , said one of the officials quoted above.

He said the trade minister was looking into why exports had fallen and what steps could be taken to boost exports.

“The Minister asked them what to do to boost exports, and many of them came to say that it was temporary and that they expected demand to pick up in December. Many exporters participate in trade fairs professionals in the United States and Europe and expect demand to be better from December,” the official said.

Non-EDI ports do not work on the electronic network and the data is entered manually into the computer system and is therefore entered into the global trade data with a lag.

“Last month’s trade figures showed that exports of some sectors fell by 30% and by 15% to 17%. Thus, some sectors, such as engineering goods, pharmaceuticals and agricultural products, are facing a difficult situation, and therefore, the ministry has decided to focus more on these sectors. Other sectors, on the other hand, are not very negative. A warning was given that there have been instances in the past where a 3% decline in exports turned positive when the final data came in,” said a second person, who was present at last Monday’s meeting with the Minister of Commerce.

The previous few months have seen strong data revisions between the provisional figures released at the beginning of the month and the final figures in the middle of the month.

For example, in September exports were up 4.83% from a year ago, according to final figures. This compares to a contraction of 3.8% estimated in the provisional data. The estimate changed by seven percentage points.

At the meeting with Goyal last Monday, exporters called on the government to urgently restore the interest equalization benefit of 5% for manufacturing MSMEs and 3% for the 410 tariff lines, as the cost of credit had a negative impact on exporters. “We calculate the additional cost to the Treasury of restoring interest equalization rates. We will then submit a proposal to the Ministry of Finance for consideration,” a second government official said.

A. Sakthivel, President of the Federation of Indian Export Organizations (FIEO), said that the credit rate for most MSMEs had already crossed the double digit mark at 11-13% and asked the Minister of Commerce to propose to RBI to create an Export Credit refinancing facility for banks.

“With this, the amount of credit extended to the export sector can be refinanced by the RBI at the repo rate, which will have no subsidy element and therefore will not affect the Treasury while helping all exporters, especially those who are not covered by the interest equalization scheme,” he said.

Meanwhile, engineering exporters facing a steep decline sought to resolve payment issues with Russia. They further expressed concern over the withdrawal of GSP benefits for India by the European Union as of January 1.

“The review meeting was very detailed in nature as a country, and item-by-item analysis was done. Suggestions on visa relaxation were made and appropriate future actions were discussed,” the president said. of the Service Export Promotion Council, Sunil Talati.

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