India’s container EXIM trade balance has been going through downward spiral in the last few years. Is this alarming for every state to expedite implementing initiatives planned in its export strategy? The answer is “Yes”. This is the time to press the panic button and work towards achieving a collective improvement in Indian EXIM trade.
EXIM trade balance is a key indicator to evaluate the overall performance of Indian container market which is majorly aided by industrial manufacturing activities and containerization growth. Significant year-on-year growth in disparity between export and import in the last few years eventually affects the trade, container market and inflow of foreign exchange in the long run.
Total container market throughput of Indian major ports in FY 17 clocked 8,446,000 TEUs with a trade balance of 262,000 TEUs, as exports are less than imports during this period. Similarly FY 16 and FY 15 followed the same trend with a trade balance of 273,000 TEUs and 246,000 TEUs respectively.
West Bengal is sharing border with three neighbouring countries Nepal, Bhutan and Bangladesh where box volume balance of trade in EXIM shows the other side of the picture. Kolkata port registered deficit of 20,000 TEUs and in contrast Haldia recorded high exports than imports with surplus of 18,000 TEUs. Chennai port tops the list among all other major ports with a deficit of 185,000 TEUs.
European Union (EU) being a major trade partner to India, has always registered trade surplus from 2006 to 2012 and turned the other side since 2013. Engineering and manufacturing goods dominate majority of the EXIM trade between EU and India. Other major commodities such as gems and jewellery, chemicals, readymade garments, handicrafts and drugs and pharmaceuticals were also registered negative growth trend. Goods and Services Tax (GST) was also an impediment in the slow growth of export segment. GST implementation impacted squeeze of exporter’s working capital. Otherwise, there is no other apparent reason for the exports to fall in the midst of recovery in the global markets.
Miniscule diversification of Indian export market, with high share of principal exports accounting as much as 78 per cent of the total exports is one of the major setbacks for the low growth of exports when compare with imports. United Kingdom has been one of the largest export market for India but rise in prices post-Brexit resulted in the drop of exports to this high potential market.
Adding to it, the demonetization has created a disruption and also uncertainty around implications of GST has led to slow down in the pace of exports through conservative buying patterns.
In order to achieve trade surplus in container market, the net exports stats should be positive where exports exceed imports. If it is otherwise the box trade fall under deficit. Positive net exports intensify container market to flourish. More exports from every port indicates jump in output from industrial activities. Growth in exports market triggers high inflow of forex into the country, which augment economic activities and market growth. United States being a largest trade deficit country in the world, could not face any impact on its economy because US dollar is considered as the world’s reserve currency, but this is not the same case with India, thus induces government to find out an effective solution to balance the trade.