India's Containerized Trade Growth Slows
India's container trade growth slowed to 1 percent (9% in the same period last year) in Q2 2019 on account of various factors like growing trade tensions and slump in manufacturing sector, Maersk said.
"The slow down is due to a cocktail of international factors such as slowing trade growth, and growing trade tensions – coupled with domestic factors like rural consumer distress, tightening liquidity and a slow-down in key manufacturing sectors. Combined, these triggers impacted the country’s economic activity, slowing overall import-export growth," said Maersk India Trade Report Q2 2019.
India’s exports to China declined by 20%, led by a reduction in demand for India-made textiles & apparel, which were large export commodities in the corresponding period last year. Imports from China contracted more, by 22%.
On the other hand, the increasing economic cooperation between India and Saudi Arabia led the latter to emerge as one of India’s strongest export partners in Q2 2019, growing by 74%, with vegetables and tiles, stone & glass exports from India leading this growth.
Steve Felder, Managing Director, Maersk South Asia said, “The overall deceleration of trade growth reflects a broad-based slowdown across key economic sectors. Amidst increasing global volatility, a slower local economy and the USA’s withdrawal of preferential access for certain Indian products, India’s import-export trade is expected to continue to face headwinds in the coming months."
"However, the Commerce Ministry’s recently proposed export promotion scheme, supported with a production-based support scheme, coupled with a weaker rupee, is expected to boost Make in India and benefit multiple industries. Additionally, India has a great opportunity to position itself as a beneficiary of the global trade tensions, provided it can attract investment, move up the ease of doing business index and reduce costs related to logistics,” he added.
India’s overall trade with North America grew 14%, and with Europe a growth of 10% in Q2 2019. Containerized trade with the Mediterranean countries was flat, primarily due to a 2% contraction in exports.
Whilst India’s export growth with the world stagnated, export growth to North America doubled from the corresponding period last year to 15% growth in Q2 2019. This was largely led by North India, which delivered an increase of 18% this year as opposed to 1% last year. West and South India also contributed to the overall export growth, while growth from East India shrunk.
A large part of this growth can be attributed to textiles & apparels, and metal exports to North America, which rose by 14% as compared to the same period last year. Additionally, Indian shrimp exports to North America further contributed to this growth curve.
The commodity that saw the sharpest fall in exports to North America is India-made vehicles, which slowed to 11% growth from a strong 67% growth last year. On the import side, while domestic demand for textiles, apparel & accessories from North America grew, commodities such as fruits and nuts, vegetables and foodstuff experienced a weakening demand.
In conclusion, Felder said, “Additional to all the opportunities that lay ahead for India, the Government also recognizes the importance of global trade which is evident from the creation of a dedicated ‘Logistics Wing’ that will integrate and enhance the numerous elements of the logistics value chain. That coupled with adoption of new technologies such as Blockchain and Artificial Intelligence across the logistics network, and concerted efforts towards the improvement of infrastructure at ports and roadways will ensure last mile connectivity for farmers, MSMEs and small businesses. All these factors combined can help in driving economic growth and trade competitiveness of India.”