The latest exports data come as a sigh of relief for Indian exporters. After a significant decline in exports in Q1 FY21 as economies around the world battled COVID-19 and imposed lockdowns, the merchandise exports in Q2 2020 are back on track. 
On a QoQ basis, the exports in Q2 FY21 have grown by 34% as compared to Q1 FY21. In absolute terms, the exports in Q2 FY21 have surpassed the pre-Covid levels of Q4 FY20 as can be seen in figure 1. September marked the first month in 7 months where the exports have shown positive growth on a YoY basis. 

Another heartening fact is that the growth in exports is observed to be an inter-industry  phenomenon. While the growth of exports for most industries in Q1 FY21 was negative  (QoQ), the results for Q2 FY21 are opposite. Almost all major industries have recovered and show a positive growth rate of exports. This can be seen in figure 2 below. Some major gains have been made in the automobile, textiles and minerals industry registering a growth close to 100%. It is to be expected that industries like Pharma and foodstuff have not grown rapidly as the decline in their exports were limited in the first place. These are essential goods whose exports remained stable (even increased for some products) during the pandemic. Only Animal Products showed a negative growth in exports.

It is also useful to look at our Export Partners and observe which countries have contributed to the growth. Figure 3 shows that the US (accounting for 15% of our exports) massively increased its demand for Indian goods and exports to the US have increased by over 50% in Q2 FY21. The other major export partners like China and UAE on the other hand show a small decline. Exports have also increased greatly to some other countries like UK and Bangladesh.

After a dismal performance in Q1 FY21, with GDP growth plummeting to -24% and exports by 15%, improved performance of exports instils hope for a better future performance of the economy. Much of the increase in exports can be attributed to the restarting of the manufacturing engine as strict lockdowns across the country began to be lifted by late June. This is reflected in the massive increase in Purchasing Manager Index (PMI) to 56.8, the highest since 2012 . Apart from the supply factor, the increased demand from the rest of the world as economies opened up, contributed to the increase in exports. Several countries that relied heavily on China are also looking to diversify to better mitigate shocks and Indian exports have gained due to this anti-Chinese sentiment. 

The recently reported increase in order and buyer enquiries for Indian exporters is an indication that the upward trend of exports can be sustained in the coming months. Hopefully, with steady government support and clarifications on claiming certain important incentives like MEIS scheme, the near future of Indian exports is encouraging and can be significant in supporting an uncertain economy