A CRISIL analysis states that although Donald Trump's anticipated tariff rises would pressure India's export industry, the nation's robust services trade surplus, and consistent remittance inflow could provide financial support and relief.
According to the survey, a number of challenges face India's export industry, including geopolitical uncertainty, which might compromise the nation's export performance.
According to the study, the fiscal year got off to a good start with a steady rise in merchandise exports in the first quarter. However, due to a drop in export performance in the second quarter, this momentum slowed.
The situation dramatically improved in October as merchandise exports soared, growing 17.3% year over year, the highest level in 28 months. This recovery followed a modest 0.5% growth in September and an average decline of 5.8% in July and August.
India's exports reached USD 39.2 billion in October, driven by a robust 27.7% gain in core exports and an 8.7% increase in the gem and jewelry industry. Rice, textiles, electronics, chemicals, engineering goods, and marine products were major contributors to the core exports.
But throughout this time, oil exports decreased. Despite the optimistic export rebound, external factors make it difficult to sustain this expansion.
Trump's administration may see additional tariff increases, as the United States has already imposed higher taxes on Chinese imports. This has increased China's export activity in conjunction with the weakening Chinese economy, which has further complicated India's trade dynamics.
In addition, imports have increased more quickly than exports this fiscal year, which has resulted in a growing trade deficit.
The research stressed that India's surplus in services trade and robust remittance flows would provide economic stability and assist keep the current account within a sustainable range, amid worries over the merchandise trade deficit.
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