Indian Export Loans Reach 12-Month High Amidst Global Demand Surge

New Delhi, Mar 22 (KNN) Bank loans to Indian exporters have surged to their highest levels in the past year, reflecting a robust demand for Indian goods on the global stage.

Despite challenges posed by the Red Sea crisis, which has disrupted maritime trade due to piracy concerns and security issues, India's export credit has seen a significant uptick.

According to data from the Reserve Bank of India (RBI), outstanding export credit for Indian banks stood at Rs 20,489 crore as of January 26, marking a 5 per cent increase for the financial year. 

This notable rise, the highest since February of the previous year, underscores the resilience of India's export sector amidst challenging geopolitical circumstances.

Madan Sabnavis, the chief economist at Bank of Baroda, highlights the pivotal role of global demand in driving export growth. 

With expectations of steady global economic expansion, Sabnavis anticipates a corresponding uptrend in export credit, pointing towards a potential recovery in India's export landscape.

India's merchandise exports demonstrated robust performance in February, recording a year-on-year growth of 11.9 per cent to reach USD 41.4 billion, the highest growth rate since June 2022. 

This marks the third consecutive month of export growth, indicating sustained momentum despite external uncertainties.

Crisil, a leading rating agency, acknowledges the resilience of India's export sector in the face of the Red Sea crisis. 

While acknowledging the crisis's potential impact on export prices during contract renewals, Crisil remains optimistic about the overall export outlook, citing encouraging forecasts from major multilateral organisations.

The positive export trend is expected to bolster India's current account, driven by a healthy surplus in services trade and robust remittances. 

Key sectors such as drugs and pharmaceuticals, engineering goods, and organic chemicals have exhibited substantial growth, contributing to the overall export surge.

While certain sectors, such as petroleum products and gems & jewellery, have experienced minor fluctuations, the overarching trend underscores India's ability to capitalise on global demand dynamics amidst geopolitical challenges.

(KNN Bureau)