Goods exports in October came in at $29.8 billion, around 17% lower than in October 2021. In fact, they were 33% lower than the all-time high goods exports of $44.5 billion in March.
So, what has led to this rather large drop? The key reason for this is the huge fall in petroleum exports. India consumes much more oil than it produces. In fact, so far in this financial year, India has imported close to 87% of the crude oil that it has consumed. Given this, the country is not in a position to export crude oil. Nonetheless, it does import crude oil, refine it and then export petroleum products. In that sense, India’s petroleum exports consist fully of petroleum products.
Cast your eyes on the chart alongside. The proportion of petroleum products in overall goods exports has gone up over the past year. From January 2020 to September 2021, petroleum exports averaged less than 11% of overall goods exports. This is because up until September 2021, the price of oil was around $70 per barrel.
Post this period, oil prices started to go up, and so did the proportion of petroleum exports in overall goods exports. In March, when goods exports peaked, petroleum exports comprised around 22% of it. This jumped to 25% in June. Some of this was an impact of oil prices going up. In March, the price of the Indian basket of crude oil had averaged at around $113 per barrel, jumping to $116 per barrel in June.
In October, petroleum exports as a proportion of overall goods exports fell to 16%. A simplistic analysis would suggest that this primarily happened because oil price fell from its peak levels in June and averaged around $92 per barrel in October. But note that oil prices averaged around $91 per barrel in September when the proportion of petroleum exports was almost 24%.
