Export growth drops to 6% while Piyush Goyal eyes 20% growth for $5 trillion economy

Commerce minister Piyush Goyal

India’s exports in August have dropped by 6.05 per cent to $26.13 billion in comparison to the August 2018 mark as per the official data released on Friday. This means that in first five months of this fiscal, overall exports are down 9 per cent to $15.33 billion.

While the government has a reason to smile as Friday’s data showed a narrowed trade deficit in August to $13.45 billion, the drop in exports flies against Commerce and Industry Minister Piyush Goyal’s statement, barely 24 hours earlier.

The minister had set a target by stating “India must bring back 19-20 per cent export growth to become a $5 trillion economy”.

The growth in exports had hit a 41-month low in June this year as all major foreign exchange earners such as petroleum oil, gems and jewellery, and engineering goods recorded a poor performance.

The imports in the same month had hit a 34-month low by a fall of 9.06 per cent. The trade deficit had gone down by nearly eight per cent to $15.28 billion in June, which was a three-month low.

Outbound trade in June had diminished by a worrisome 9.7 per cent after registering a rise of 3.93 per cent in May 2019.

In August, the oil imports had shrunk by 8.9 per cent to $10.88 billion while the non-oil imports were down by 15 per cent to $28.71 billion. A negative growth has been registered in the exports of gems and jewellery, and the engineering goods.

Cumulatively, during April-August 2019, exports were down 1.53 per cent to $133.54 billion, while imports contracted by 5.68 per cent to $206.39 billion. Despite the nearing festival season, the gold imports have plunged 62.49 per cent to $1.36 billion in August 2019.


Gems and jewellery exports have continued the downward trend with a fall of 14 per cent in August 2019 to $2.84 billion against $3.32 billion in the same month, last year.

Gem and jewellery experts say that the reason behind the fall is the hike in import duty on cut and polished diamond from 2.5 per cent to 7.5 per cent in the union budget.

Finance Minister Nirmala Sitharaman in her speech had announced the hike with a view to curb “round-tripping” of the precious stones as was witnessed in the Nirav Modi scam.

With the rise in duty, the gem and jewellery industry has to pay higher levy to bring back the consignments that have been rejected. Import duty on gold was also hiked by 12.5 per cent from 10 per cent.

Major players in the gem and jewellery industry are demanding a reduction in duty on gold and diamonds and greater esse of doing business post the GST as cut and polished diamond exports had plunged by 25 per cent in August to $1.64 billion while the gold jewellery exports had climbed up to $911 million in the same month.

The cumulative April to August picture is depressing. The cut and polished diamond exports are down by 19 per cent to $8.34 billion. The gold jewellery exports have dipped 4 per cent to $5.02 billion. However, the silver jewellery export are up by 83 per cent to $437 million.

This is hurting India’s global leader position in the field and players have been claiming that India cannot hold its pole position in exports with high duty structure and taxation regime.