Container availability has improved and ocean freight rates have fallen by up to 15%, exporters said. Still, growth in export volume in the current fiscal year may not be significant as global inventory is high and key rates in global markets are up, they added.

The Federation of Indian Export Organizations (FIEO) has pegged India’s merchandise exports in the current fiscal year at $475 billion, 14% higher than the previous fiscal year, but significantly lower by growth seen in FY22 versus FY21.

In FY22, India’s merchandise exports increased by 43% from FY21 to $418 billion.

“In FY22, global markets built inventory as commodity prices rose. Exports had picked up momentum after the second wave of Covid-19, but now, due to the inflationary pressure, export volume growth will be lower,” said Ajay Sahai, Managing Director. of the FIEO.

If the Russian-Ukrainian conflict does not end soon, the dynamic could change, he said.

“As things stand, India’s merchandise exports in FY23 may not exceed $475 billion,” Sahai added.

As China’s economy opens up after four months of Covid-19-induced shutdowns, Indian exporters will face increased competition from China in global markets, he said.

“Container availability has improved and freight costs have dropped by 10-15%. We have to see how long this situation will last,” said Mahesh Desai, President of Engineering Exports India.

“Once China gets active, the container shortage might reappear,” said Ravi Sehgal, former chairman of the Engineering Export Promotion Council of India.

While international container prices rose by up to 15% on average in May, in India they fell, mirroring the trend seen in China. There was a month-on-month decline in 40ft container prices in Chennai to $4,015 in May from $4,044 in April. India recorded its highest textile and apparel exports ever at $44.4 billion in FY2022, indicating a 41% increase from FY21.

Ready-made apparel exports were $16 billion with a 36% share in FY22, up 31% from a year earlier.