Banks' export credit at Rs 20489 crore surges to 12-month high amid global demand
global demand for Indian goods despite the Red Sea crisis, which attracted military response from several countries, impacting trade.
Outstanding export credit for Indian banks was seen at Rs 20489 crore at the end of January 26, rising 5% this financial year, data from Reserve Bank of India showed. This was the highest since February last year.
«Export growth will be largely driven by global demand and as we do expect global growth to be steady, we can expect a recovery here. This will be reflected also in growth in export credit,» Bank of Baroda chief economist Madan Sabnavis said.
India’s merchandise exports surged 11.9% year-on-year in February to $41.4 billion – the fastest growth since June 2022 — after growing 3.1% in January. With this, exports grew for the third consecutive month, indicating sustained momentum, Crisil said.
«The near-term challenge to India’s exports due to the Red Sea crisis has been limited so far,» the rating company observed.
The Red Sea crisis started on 19 October 2023, when Yemen's Houthi launched missiles and armed drones at cargo vessels operated by Israeli companies, demanding an end to the invasion of the Gaza Strip.
«How the crisis impacts prices when export contracts are renewed will be a key monitorable. Barring this hiccup, the recent healthy export momentum and forecasts by major multilateral organisations of better trade growth this year over last year are encouraging,» it said.
This is also good news for India's current account, as with robust services trade surplus
