India Exports Flowing To Countries With Fewer Coronavirus Cases, Says Crisil

India's exports are picking up to those countries that have managed to control the pandemic, according to Crisil.

Exports from Asia's third-largest economy fell sharply starting March but have seen some pick-up sequentially since then. Exports were down 10.2% year-on-year in July compared to a 60.2% decline seen in April, Crisil said in a research note.

The improvement in outbound shipments has come from countries where the spread of the virus has been controlled. “India's exports growth in a pandemic-dominated world appears to be inversely related to the rise in Covid-19 cases in its export destinations,” said Crisil economists DK Joshi and Pankhuri Tandon.

Data for country-wise shipments showed that India's exports to China rose 78.1% year-on-year in June. Exports to other south Asian economies such as Malaysia rose by 76%, while shipments to Vietnam jumped 43%, and those to Singapore increased by 37%. Most of these economies had flattened the Covid-19 caseload curve in this period, Joshi and Tandon said.

In contrast, exports declined to western economies such as the U.S., Brazil and the U.K.

Trade Deficit With China Falls

Crisil highlighted that India's exports to China have grown in double digits since May.

Industrial commodities such as iron and steel, ores, and organic chemicals were the key drivers of this rise, according to data available till May.

In contrast, India's imports from China continue to decline, owing to weaker domestic demand and import restrictions. This sharp rise in exports relative to imports has significantly brought down trade deficit with China, Crisil said.