India's export sector witnessed a significant upswing in February, hitting an 11-month peak at $41.4 billion, as reported by the Commerce Ministry amidst challenges posed by disruptions in shipping due to Houthi attacks in the Red Sea region. Despite these obstacles, various key sectors contributed to the remarkable 11.86% surge in exports compared to the previous year.
Leading the charge were engineering goods, electronic goods, organic and inorganic chemicals, pharmaceuticals, and petroleum products. Engineering goods stood out with a robust 15.9% increase, reaching $9.94 billion, up from $8.58 billion in February 2023. Notably, electronic goods exports witnessed an impressive growth of 54.81%, soaring to $3 billion from $1.94 billion in the same period last year.
The export of organic and inorganic chemicals saw a substantial rise of 33.04%, climbing to $2.95 billion from $2.22 billion in February 2023. Similarly, pharmaceutical exports surged to $2.51 billion, marking a 22.24% increase over the previous year's $2.06 billion. Meanwhile, petroleum products recorded a moderate growth of 5.08%, reaching $8.24 billion.
Agricultural exports, including tobacco, also demonstrated a remarkable growth rate of 58.24%.
Notably, the overall trade deficit exhibited a notable improvement, shrinking by 37.80% from $116.13 billion in April-February 2022-23 to $72.24 billion in April-February 2023-24. The merchandise trade deficit also narrowed by 8.43% from $245.94 billion to $225.20 billion during the same period, indicating a strengthening of macroeconomic fundamentals that is likely to bolster the rupee.
Despite challenges posed by geopolitical tensions in the Red Sea region, necessitating longer shipping routes via the Cape of Good Hope, India's export sector displayed resilience. With around 80% of India's trade with Europe passing through the Red Sea, the shift to the longer route via Africa has led to increased transport costs and slower movement of goods, adding around 5,000 nautical miles and approximately 15 days to the journey. Nonetheless, the Indian export sector has managed to navigate these challenges, reflecting its adaptability and resilience in the face of adversity.
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