India's textile exports grew by 9.59% in May 2024 compared to the same month last year, according to a report by the Confederation of Indian Textile Industry (CITI) [be94110c]. Apparel exports also increased by 9.84% during the same period. The combined exports of textiles and apparel in May 2024 registered a 9.70% growth over May last year. Indian textile exports grew by 6.04% during April-May 2024 compared to the previous year, while apparel exports increased by 4.46% during the same period. The cumulative exports of textiles and apparel during April-May 2024 saw a 5.34% rise compared to the same period last year. The growth in exports was led by sectors such as electronic goods, pharmaceuticals, organic and inorganic chemicals, engineering goods, and petroleum products. The top ten export markets for India were the US, UAE, Netherlands, UK, China, Singapore, Saudi Arabia, Bangladesh, Germany, and France. India's overall merchandise exports jumped by 9.1% to $38.13 billion, while service exports climbed by 11.7% to $30.16 billion [be94110c].
The growth in exports is attributed to the demand revival in traditional export markets such as Europe and the US. Commerce Secretary Sunil Barthwal expects exports to show better growth numbers with improved demand coming in from the European Union, UK, West Asia, and the US. The Federation of Indian Export Organisations President Ashwani Kumar attributed the positive trajectory in May 2024 to robust order bookings [be94110c].
India's domestic manufacturing sector is set to receive stronger external support in the upcoming months as investment in the sector is expected to rise. Organizations in the US and Europe are focusing on reindustrialization to enhance supply chain resilience, which could benefit India’s manufacturing firms as part of the China Plus One strategy [26c4f5c9].
According to a report by the Ministry of Finance, the Indian economy closed the financial year 2023-24 strongly despite strong external headwinds. The report suggests that the growth momentum will continue in the current April-June quarter of 2024-25. Key high-frequency indicators of growth, such as GST collections, e-way bills, electronic toll collections, vehicle sales, purchasing managers' indices, and the value and number of digital transactions, all point to the growing strength of the economy. The report also mentions that the EXIM Bank of India has forecasted double-digit growth in merchandise exports for the first quarter of FY25. This positive outlook is attributed to improved economic activity and consumer sentiment in Europe, as well as a steady US economy. The report highlights the positive indications in the farm sector and the stabilization of food prices. It concludes that India's strong macroeconomic buffers will help the real sectors of the economy navigate external headwinds and sustain the growth momentum from the previous year [e7ca8fc6], [fecdfcd2].
India's manufacturing industry's share of GDP is estimated to increase from 15.6% to 21% by 2031. The global demand for consumer-focused merchandise producers in India is expected to increase due to inflation cooling down in Europe. The stainless steel industry is cautiously optimistic about the year ahead. A demand revival would provide an opportunity for small businesses to generate employment. Strategies such as Production-Linked Incentive (PLI) and flexible FDI policies have helped India diversify its exports basket. India aims to double its export market share and achieve $1 trillion in merchandise exports by 2027-28. India has learned from the pandemic and is focusing on creating a robust domestic base of raw materials and components for key manufacturing industries. The country is also strengthening its supply chain and exploring newer markets for exports. The progress as a global export hub and increasing FTA deals are expected to create strong trade relationships. Trade centers need consistent supply and presence. India's trade relations have transformed significantly since the 1991 reforms. The government has increased budgetary allocations for the manufacturing industry and implemented schemes to enhance manufacturing and distribution networks. The revival of the global economy is an opportunity for India to reach high export levels in various sectors. The government aims to have consistent, credible, and convergent policies to support export growth. India's trade destinations include the US, Europe, Asia, and newer markets like Montenegro, Turkmenistan, Mongolia, and Honduras. The country's export performance is driven by recovery in key markets, increased consumer spending, fiscal stimulus, and aggressive export push by the government. The changing consumer trends and market dynamics are expected to create strong trade relationships. India's progress as a global export hub and increasing FTA deals are expected to help in this regard.
Prashant Jain, founder and CIO of 3P Investment Managers, believes that the environment in India is favorable for manufacturing to grow rapidly. He cites several reasons for this, including low wages compared to other Asian manufacturing countries, multinational companies wanting to de-risk and reduce dependence on a single country, and India's geopolitical stability. Jain also discusses the performance of the BSE Sensex, stating that while nominal returns may be low, real returns will be high. He emphasizes the importance of looking at the Sensex in relation to the growth of the economy and highlights the improved corporate profits-to-GDP ratio. Jain expresses optimism about India's manufacturing prospects, stating that the country's manufacturing should progress much faster than in the past. He also provides advice for retail investors, urging them to invest early, stay invested for the long term, and remain diversified in equities [0e508e34].
The United Kingdom (UK) has overtaken China to become India’s fourth-largest export market in May, with exports to the UK growing by a third to $1.37 billion. The disaggregated data for May wasn’t immediately available, but trends over the past few months showed that exports to the UK were dominated by items such as machinery, food items, pharmaceutical products, textiles, jewellery, iron, and steel. India’s top 10 key export markets witnessed positive growth in May, with the United States (US) remaining India’s largest export destination, followed by the United Arab Emirates (UAE). The Netherlands saw a significant increase in exports, becoming India's third-largest export market. Out of India’s top 10 import markets, inbound shipments from only Saudi Arabia and Switzerland in May contracted, while the remaining eight witnessed growth. Imports from Russia grew 18% to $7.1 billion, mainly due to India's dependency on crude oil. China remained India's second-largest import destination, with a rise of 2.81% at $8.48 billion [d5eb1411].