A twist in the exports

recovery script
CRISIL Economy First Cut
August 2016

Overview
Export growth slipped back into negative territory in July, tanking 6.8% on-year, belying hopes of a sustained
recovery. Of particular concern was a 4.5% drop in non-oil exports, which had grown at an average 1.8% in the
previous two months.
However, trade deficit narrowed to $7.8 billion down $5.3 billion on-year and $0.4 billion on-month as the
slide in imports was sharper, at 19%.

Despite the dip in July, exports so far this fiscal have seen some revival compared with last year with an
average decline of 3.3% for April-July compared with 14.7% in the same period of 2015. Imports, in contrast,
have seen a steeper decline; at 16.3% compared with 11.4% last year.
CRISIL expects export growth to remain tepid through 2016 given that global growth forecasts continue to edge
lower. For yet another year, lower import bill (muted oil imports due to benign crude oil prices and weak gold
imports given domestic policy restrictions) will anchor Indias current account deficit (CAD). But core imports
(non-oil, non-gold) are expected to rise on the back of a pick-up in domestic consumption demand. CRISIL,
accordingly, expects CAD to rise slightly in fiscal 2017, to 1.3% of GDP from 1.1% in fiscal 2016.
Some improvement in exports this year
April-July
%, y-o-y
25.0

2015-16

Investment-led imports doing better

2016-17

%, y-o-y

Consumption goods

Investment goods

20.0

15.0
5.0

10.0

-5.0
-15.0

0.0

-25.0
-10.0

-35.0
-45.0

-20.0

-55.0
Overall

Oil

Non-oil Overall

Exports

Oil

Gold

Non-oil
non-gold

-30.0
Oct-14

Imports

Jan-15

Apr-15

Jul-15

Oct-15

Jan-16

Apr-16

Jul-16

Source: Ministry of Commerce and Industry, CEIC, CRISIL Research

Exports back in negative zone

Exports fell 6.8% on-year in July, reversing the improvement seen in the past couple of months as non-oil
exports looked up. Shrinking global demand, especially in Asia, have hurt Indias exports.

Oil exports saw a steeper slide of 21.8% compared with 16.4% in June. So far this fiscal, oil exports have
fallen 19.2%, compared with 50.1% in the corresponding four months last year.

Non-oil exports fell 4.5% compared with an average 1.8% growth in the preceding two months. Sectors such
as textiles, engineering goods, plastic goods and chemicals saw a decline, even as exports of gems and
jewellery rose.

Classification: INTERNAL

Imports deeper in the red

Imports saw a broad-based decline, falling 19% compared with 7.3% in June.

Oil imports fell 28.1% and non-oil imports by 15.8%. Within non-oil imports, gold saw the steepest fall, at
63.7% compared with 38.5% in June.

Core imports (investment and consumption-related) fell sharper, at 9.9% compared with 1.1% in June, due
to a sharp decline in imports of iron and steel, machinery and transport equipment, chemicals and
electronic goods. A rough classification shows imports of consumption-oriented items have come off after
some revival early this year (as reflected in the three-month moving average of growth). Investmentoriented imports, meanwhile, have seen a sharper and more sustained revival.

Trade performance (%, y-o-y)

Exports

Imports

Oil
imports

Non-oil
imports

Oil
exports

Non-oil
exports

FY15

-0.8

0.2

-15.1

10.4

-8.5

1.1

FY16

-15.4

-14.6

-38.9

-3.2

-46.1

-8.0

Q1 FY17

-2.1

-15.3

-23.8

-12.3

-18.1

0.1

June 2016

1.3

-7.3

-16.4

-4.1

-10.8

3.1

July 2016

-6.8

-19.0

-28.1

-15.8

-21.8

-4.5

Source: Ministry of Commerce and Industry, CEIC, CRISIL Research

Analytical Contacts:
Dharmakirti Joshi

Dipti Deshpande

Chief Economist, CRISIL Ltd.

dharmakirti.joshi@crisil.com

Senior Economist, CRISIL Ltd.

dipti.deshpande@crisil.com

Media Contacts
Shamik Paul

Khushboo Bhadani

Media Relations
CRISIL Limited
D: +91 22 3342 1942
M: +91 99 208 93887
B: +91 22 3342 3000
shamik.paul@crisil.com

Media Relations
CRISIL Limited
D: +91 22 3342 1812
M: +91 72081 85374
B: +91 22 3342 3000
khushboo.bhadani@crisil.com

Classification: INTERNAL
3

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Last updated: April 2016

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