External factors help in boosting India’s global trade growthQ1 2018 INDIA

A.P. MOLLER – MAERSK’S TRADE REPORT

This report is based on containerized trade dataAll growth percentage is year on year (YoY) for the period Jan to March 2018 except wherever mentioned specifically

A.P. MOLLER - MAERSK TRADE REPORT – Q1 2018 INDIA 2

India’s containerized trade with the worldhas enjoyed a spirited uptick in the firstquarter of 2018, as it beat the country’s pastperformance in export-import growth overeight quarters. Imports witnessed a materialincrease of 16%, with exports also growingat a healthy pace of 7%. Together, they ledIndia’s trade to a strong start this 2018.

“These numbers become more relevant whenviewed through a global lens. They aresignificantly higher than estimated globalcontainerized demand growth of 3-4% ,”explains Steve Felder, Maersk Line ManagingDirector for India, Sri Lanka, Bangladesh,Nepal, Bhutan and Maldives.

Environmental interventions in China and recovery from demonetization drives uphill growth of recyclables

Weaker rupee and improvement in GST refunds benefits India’s exports

Combined effect propels India’s overall trade growth to jump 11%

East India under potential pressure as metal and rice exports lose sheen

IMPORTS

The key contributor to import growth duringthis period was dry cargo (commodities thataren’t liquid or perishable), which jumped by22%. This contrasts with the correspondingperiod last year when the segment grew only2%. Recyclables, namely paper and metal,were the two dry cargo commodities that ledthis growth and registered strong 61% and55% increases respectively. A large portionof these commodities came to India fromNorth America and Europe, and helped Northand West India imports rise by 36% and13% respectively.

“Recyclable commodity imports wereseverely impacted by de-monetization. Withthe rebound we’ve seen in this categorynow, it would be safe to assume that theeffects are finally wearing off and domesticconsumption is on the rise,” says Felder.

“Additionally, China’s recent decision toincrease restrictions on waste paper importsbenefited India, which is a major importer ofthis commodity for local recycled papermanufacturing. Together, these keydevelopments have augured well for India’simport growth.”

This report is based on containerized trade dataAll growth percentage is year on year (YoY) for the period Jan to March 2018 except wherever mentioned specifically

A.P. MOLLER - MAERSK TRADE REPORT – Q1 2018 INDIA 3

EXPORTS

On the export side, rocketingdemand for Indian made vehicles inTurkey, and Indian fruit and nuts inUK and UAE, pushed growth to ahealthy 7%.

EAST INDIA WITNESSES HIGHEST EXPORT DECLINE

A comparison of the exportperformance of India’s four regionsshows that East India saw the highestdecline in exports this year at -6%growth. This was the result of asignificant fall in the metal segment(mainly aluminium, ferro and steel)and rice exports originating from theregion. These are estimated to havedropped by 12% and 20%respectively. In contrast with Q1 lastyear, East India led the country’soverall export growth at 29%.

“Rice exports overall have been weakthis year, while the metals segment,mainly ferro and pipes, wasn’tcompetitive in global markets, whichled to this stark decline,” explainsFelder.

The region’s metal exports fell acrossall its key destination markets, whilethe highest drop in rice exports waswitnessed in the Mediterranean andWest Africa markets.

On the other hand, imports of pulsesinto East India saw an upward climb,particularly chick peas and yellow peasfrom Canada and Turkey.

“The first quarter has been a fairlyconstructive period for exportgrowth as well. As the effect ofpolicy shifts faded and the inflowof GST refunds began, it createdsurplus capital in the hands of localmanufacturers. The market wasfurther buoyed by a weaker rupee,which in turn increased India’sexports to the world,” adds Felder.

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This report is based on containerized trade dataAll growth percentage is year on year (YoY) for the period Jan to March 2018 except wherever mentioned specifically

A.P. MOLLER - MAERSK TRADE REPORT – Q1 2018 INDIA 4

Indian made vehicle exportslead India’s overall exportgrowth

At 18% export growth, Indianmade vehicles gained in demandacross Africa, Latin America andTurkey. This was largely led by the2-wheeler and 3-wheelersegments.

“With India fast becoming a keyautomotive manufacturing hub,OEMs across the board areinvesting in increasing theirproduction capacity in the country.This is in turn also benefiting theauto ancillaries’ industry, andcreating a multiplier effect in autoexports from India,” says Felder.

Vehicle exports were largely drivenby Western India, which clockedan impressive 71% growth, upfrom 13% last year.

On the import side, vehicles fromGermany registered a stronguptick with imports coming intoSouth India which is one of themajor auto assembly hub for theIndustry.

Overall automobile Imports to thisregion saw a significantturnaround going from acontraction of 12% last year to arobust 28% growth in thecorresponding period this year.

WEST INDIA drives overall auto export for the country

Key destination markets include Africa, Latin America and Turkey

SOUTH market increases auto imports

BECOMES key market for imports from Germany

This report is based on containerized trade dataAll growth percentage is year on year (YoY) for the period Jan to March 2018 except wherever mentioned specifically

5

REEFER TRADE GROWTH SLOWS DOWN

India’s overall reefer (refrigerated cargo)trade growth slowed on the export as wellas import side. However, a strong increasewas registered by exports of commoditieslike pharmaceuticals to North America andgrapes to North Europe.

On the import side, inflow of reefersslowed. This was due to a slowing growthfrom Mediterranean countries (8% up, from82% up last year) and contraction of 33%from North Europe (compared to a 35%increase last year).

“Countries across the world are consideringpolicies to reduce their healthcare spending,and pharmaceuticals contribute a majorportion of these expenses. The costarbitrage India offers, combined withimproving quality in manufacturing, iscontributing to India’s growing play inpharmaceutical exports. Export of grapes onthe other hand, are more cyclical andseasonal in nature,” explains Felder.

A.P. MOLLER - MAERSK TRADE REPORT – Q1 2018 INDIA

28%

16%

COMBINED YOY GROWTH

Q1 2018 Q1 2017

Fig 1: Combined YOY reefer export growth driven by the two commodities

0%

10%

20%

30%

NORTH AMERICA NORTH EUROPE

29%

10%18%

8%

Q1 2018 Q1 2017

Fig 2: Reefer exports from India to key markets on the rise

GROWTH TREND TO CONTINUE THROUGHUPCOMING QUARTERS

With large trading economies such as Chinaand US sparring over their trade relations,India as well as other emerging countries areexpected to witness strong inflows of selectcommodities.

Says Felder, “Commodities have to findmarkets, and as India’s domestic consumptioncontinues to rise, we can expect to see manyof them find takers here. Also, the increasingaspiration of India’s populace will sustain thistrend over the months to come, assumingthere are no significant policy changes.”

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This report is based on containerized trade dataAll growth percentage is year on year (YoY) for the period Jan to March 2018 except wherever mentioned specifically

A.P. MOLLER - MAERSK TRADE REPORT – Q1 2018 INDIA 6

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