India’s electronics exports end 31-month growth streak

 – Gudstory

India’s electronics exports end 31-month growth streak – Gudstory

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MUMBAI: India’s electronics exports hit a 13-month low in September, falling 3.7% from a year earlier, marking the first contraction in 31 months. Despite a modest contraction, steady imports widened the electronics trade deficit to an 18-month high, according to a Mint analysis of trade data released last week.

The value of electronics exports during September was $1.9 billion, down from $2 billion a year earlier. Meanwhile, electronics imports rose 13.3% to $8.1 billion, widening the trade deficit to $6.1 billion.

In FY2013, exports of electronics goods emerged as an outstanding performer for India’s export basket, totaling $25.3 billion, 49% higher than FY2012, even during a year when total exports grew only 6.7% because Global macroeconomic headwinds stemming from the Russia-Ukraine war affected India. Extensive export.

Graphic: Gold

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Graphic: Gold

In 2022-23, the electronic goods sector rose to sixth position among all goods export categories, surpassing ready-made garments for the first time. Additionally, as per the first Mint analysis, it ranked fourth in the manufacturing goods segment.

Between April and September, electronics exports rose 28% from a year earlier, while imports rose 9%. Exports increased by 27% in August.

Experts said the reduction in discretionary spending was due to a slowdown in demand globally as high inflation in key markets hit consumers’ purchasing power. As a result, India’s electronics exports declined. Global smartphone sales fell 8% during July-September from a year earlier, the ninth consecutive quarterly decline, according to a report from Counterpoint Research on Tuesday. It added that sales of personal computers also declined by 9% during this period.

The decline in sales was due to a slower-than-expected recovery in consumer demand in the US and Europe, major export destinations of electronic goods from India.

Within electronics goods, exports of consumer electronics faced serious challenges. Although the segment performed well during the first nine months of 2022, it could not sustain the momentum. Exports of consumer electronic goods declined for all months in 2023, down 70% in August from a year earlier, the latest disaggregated data show.

That said, experts have also cautioned that earlier growth in electronic goods was primarily driven by product assembly rather than a real push in manufacturing. Raghuram Rajan, former governor of the Reserve Bank of India, has said that “very little work is done in India other than assembly, although manufacturers claim they intend to do more in the future. Therefore, India still imports most of the things used in mobile phones.”

Ajay Sahay, Director General of Federation of Indian Export Organization, said, ‘Consumer electronics have been showing a declining trend for some time. “Between April and August, a significant decline was witnessed primarily in consumer electronics exports as exports in this sub-segment declined by more than 50% year-on-year.”

The components of India’s electronic goods exports include computer hardware, peripherals, electronic components and medical and scientific equipment. Electronics has also been the biggest beneficiary of the Centre’s production-linked incentive scheme, receiving the bulk of the incentives offered. It was notified in April 2020, and helped mobile device manufacturers set up production units for exports.

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Updated: October 19, 2023, 12:34 am IST


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