Unprecedented Decline

India’s exports are currently going through an unprecedented decline which should be a cause for serious concern for policymakers. During the first 11 months of 2015, exports were lower in every single month as compared to the corresponding months of 2014. The figures for November 2015 should be particularly disconcerting for they show exports declined to just about $19 billion, a level that has not been seen since November 2010. Exports have fallen precipitously by more than 27% in November 2015 when compared to November 2014. Thus, in the first eight months of the current fiscal, ­exports have been lower than during the same period in 2014–15 by over 18%.

India’s exports to every major region of the world declined during April–November 2015 year-on-year. Exports to Africa have been hit the most, the fall being by over a quarter. India has been making consistent efforts to diversify its export markets by reaching out to Africa, including through institutions like the India–Africa Forum Summit. These export numbers should, therefore, be quite disappointing. But it is the decline in exports to its largest markets in Asia by more than 20% that has had the largest impact. Exports to ASEAN (Association of Southeast Asian Nations) slumped by over 25% during April–November 2015 year-on-year, while exports to the three North Asian countries, namely, China, Japan and South Korea, contracted by more than 20%, essentially due to a steep fall in exports to China (22%). The fall in exports to China implies that India’s trade imbalance with its largest trade partner, which was more than four times its exports in 2014–15, could increase even further since imports from China have increased marginally in the current fiscal.