Indian Exporter community may have to hedge their open positions, now!!

Total exports of merchandise and services in FY 2024-25 begins with strong growth of 6.88% estimated at USD 64.56 Billion in April 2024 as compared to USD 60.40 Billion in April 2023.

GOI has released a PIB release on Trade metrics:

Here are some key points from the release:

Overall Exports: India's total exports (merchandise and services combined) for April 2024 are estimated at USD 64.56 billion, reflecting a 6.88% increase compared to April 2023.
Merchandise Exports: Merchandise exports witnessed a modest growth of 1.08% at USD 34.99 billion in April 2024 as compared to USD 34.62 billion in April 2023.
Import Growth: However, merchandise imports grew at a faster pace of 10.30%, reaching USD 54.09 billion in April 2024 compared to USD 49.06 billion in April 2023.
Trade Deficit: This resulted in a widening of the merchandise trade deficit to USD 19.1 billion in April 2024.

The PIB release also highlights some positive aspects within merchandise exports:

Growth in exports of Electronic Goods (25.8%), Organic & Inorganic Chemicals (16.75%), Petroleum Products (3.10%) and Drugs & Pharmaceuticals (7.36%).More than 25% growth in Electronic goods is a heartening news.
Imports have grown mainly due to huge Gold imports which tripled to US$3.11 billion from $1.01 billion
Almost all of the sharp 32.3% year-on-year surge in April's goods trade deficit of US$19.1 billion ad compared to a US$14.4 billion gap in April 2023, was due to gold imports and also 20.2% rise in the oil import bill amounting to US$2.8 billion.

Table : Trade during April 2024

		April 2024 (USD Billion)	April 2023 (USD Billion)
Merchandise	Exports	34.99	34.62
Merchandise	Imports	54.09	49.06
Services*	Exports	29.57	25.78
Services*	Imports	16.97	13.96
Total Trade (Merchandise +Services) *	Exports	64.56	60.40
	Imports	71.07	63.02
	Trade Balance	-6.51	-2.62

* Note: The latest data for services sector released by RBI is for March 2024. The data for April 2024 is an estimation, which will be revised based on RBI’s subsequent release.

Courtesy: Ministry of Commerce & Industry, GOI

Given that INR has been depreciating against US $ in an orderly fashion and India's Trade deficit is under control, it looks like in the short to medium term the INR is bound to appreciate and all those with substantial exports must cover themselves atleast for a year from now on.

The graph given below is illustrative of the above point.

All exporters may have to take this important call to safeguard their profitability in the next few months upto one year.

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