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Monday, May 15, 2017

Measurement of exports in India

by Radhika Pandey, Ajay Shah and Pramod Sinha.

The Indian statistical system has many difficulties. In general, a certain mistrust of official statistics is well placed. Every user of data must skeptically examine all data that is sought to be used. In this article, we kick the tyres of exports data, juxtaposing two different sources. We are pleased to report that there is no large discrepancy. We conjecture a third possibility for constructing a quarterly measure of exports, based on firm data, and find that this does not work out. In the future, it may work, thus giving a 3rd measure of quarterly exports.

There are two independent sources of exports data:

  1. RBI produces the Balance of Payments data. This obtains information about the exports of goods and services by watching flows of money through banks. This is released quarterly.
  2. The Department of Commerce (DGCI&S) releases monthly data for exports of goods (only). This is based on the daily trade data that it receives from Customs authorities, SEZs and Ports. The phrase 'exports' is used when describing this data, but it is important to always refer to it as 'merchandise exports' or 'exports of goods'.

In order to assess the sanity of these two series, we compare the year-on-year change for them against each other.

The above graph compares the year-on-year change for the BoP exports and the merchandise exports series. Although varying in magnitude, the figure shows broad similarity in the ups and downs in the two series. The rank correlation between the two is 0.93. This seems sound.

The above graph plots the seasonally adjusted point-on-point growth (annualised) for the two exports series. This uses our work on seasonal adjustment. We observe similar trends in the two series. The rank correlation here is 0.83, which is mildly worrisome.

Can firm data yield a third measure of exports?

Large firms are important in India's exports, across both goods and services. As an example, in 2014-15, of the total exports of goods and services of USD 474.24 billion, the annual report data for 4666 exporting companies in the CMIE database reveals exports of USD 248.60 billion. Hence, we wonder: Could we use firm data to construct on exports time series?

The legal framework on reporting of annual financial statements requires that companies report their export income. Section 134 (3)(m) of Companies Act, 2013 states:

There shall be attached to statements laid before a company in general meeting, a report by its Board of Directors, which shall include: ---(m) the conservation of energy. technology absorption, foreign exchange earnings and outgo , in such manner as may be prescribed.

Rule 8(3)(C) of the Companies (Accounts) Rules, 2014 states:

The report of the Board shall contain the following information and details, namely-- ---(C) Foreign exchange earnings and outgo The Foreign Exchange earned in terms of actual inflows during the year and the Foreign Exchange outgo during the year in terms of actual outflows.

This clarity in legal drafting shapes the disclosure of export income of firms in their annual reports. A large chunk of firms disclose their export income in their annual reports. As an example as on 31st March, 2015, out of 4038 listed firms, 1795 firms are identified as exporters using this annual filing of financial statements. We could use quarterly data for these firms, which is required to be disclosed by all listed companies, to construct an exports measure. In terms of methods, we could do for exports what we have done previously for net sales using firm quarterly data.

When we turn to quarterly data, however, the legal instruments that define disclosure requirements do not clearly require information about exports. Under Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, SEBI requires companies to diclose their quarterly results, following the accounting standards prescribed by the Central Government under Section 133 of the Companies Act, 2013. The field on "Income from Operations" includes: (a) Net sales/income from Operations, and (b) Other operating income. (See Annexure I of this circular.) As a result, most firms do not report their 'export income' in their quarterly disclosures. Some firms voluntarily disclose information on exports, but this is part of the "Notes" to financial statements. As an example see Point 4 under Notes of this report.

In the table below, we present a comparison of firms that report exports in their annual reports versus those that report export income as part of their quarterly disclosures. The table shows the proportion of listed exporting firms that report 'export income' in their quarterly disclosures. It shows that a miniscule proportion of firms that are `exporters' as disclosed in their annual reports publish export income as part of their quarterly disclosures.

Year Total Listed Firms Exporters (As per AR) Exporters (As per QR) Share of firms
2000-03-31 3976 1891 54 2.9
2001-03-31 4373 2046 76 3.7
2002-03-31 4800 2013 97 4.8
2003-03-31 4876 1986 106 5.3
2004-03-31 4820 1986 108 5.4
2005-03-31 4990 1982 118 6.0
2006-03-31 4998 2037 131 6.4
2007-03-31 4884 2067 135 6.5
2008-03-31 4882 2084 101 4.8
2009-03-31 4893 2086 109 5.2
2010-03-31 4897 2046 88 4.3
2011-03-31 4867 2032 78 3.8
2012-03-31 4755 1996 49 2.5
2013-03-31 4612 1958 42 2.1
2014-03-31 4436 1911 43 2.3
2015-03-31 4038 1795 34 1.9

Recent improvements in the quarterly disclosures of firms

On 5 July 2016, SEBI has modified the format for publishing financial results under the SEBI (Listing Obligations and Disclosure Requirements) Regulations. This new circular mandates that the quarterly financial statements should follow the format prescribed in Schedule III to the Companies Act, 2013. Schedule III to the Companies Act, 2013 lays down general instructions for preparation of balance-sheet and statement of profit and loss of a company. Through requirements of 'additional information', companies are required to disclose income from exports. The relevant text from the legal instrument is as follows:

5. Additional Information The profit and loss account shall also contain by way of a note the following information, namely-- (e)Earnings in foreign exchange classified under the following heads, namely-- I. Export of goods calculated on F.O.B. basis;...

The revised reporting format becomes applicable for the period ending on or after March 31, 2017. From March, 2017 onwards we hope to see improved reporting by firms of quarterly exports data, which would make possible the construction of a third quarterly exports time series.


The Indian statistical system is riddled with problems of measurement. Critical pillars of the statistical system -- NAS, NSSO, ASI, IIP -- are not trusted. Every user of data must bring critical thinking into the choice of data that will be used. Our analysis above is reassuring in finding agreement between exports data released by RBI and the Ministry of Commerce, and rejects the possibility of constructing an exports measure using the present framework of quarterly disclosures by listed companies. Going forward, with improved reporting by firms we could get a third measure of quarterly exports.


The authors are researchers at the National Institute for Public Finance and Policy.


  1. It is not surprising that BoP data from RBI and DGCIS data match, though I wonder if you have factored in the lag that usually is there between actual exports and payments realisation. DGCIS reports monthly exports based on daily trade reports by customs and SEZ as explained in your blog, and RBI reports the data when payment is realised. In fact, every shipping bill filed with customs on their EDI server during exports has an SDF declaration column that gets communicated to RBI for monitoring and which binds the shipping bill filer (exporter) to the payment realisation failing which FEMA provisions would kick in. Therefore as long as the exports at customs is reported (all non-smuggling cases), it cannot happen that money is not realised down the line. Therefore, barring the very small portion of write-offs/non-realization/insurance claims, both data series matching is not surprising.
    The third part is more interesting. Firm level data (and sectoral data) is more important for detailed analysis of international trade and measuring effectiveness of some of the so called export promotion schemes. Apart from the reporting mechanism as outlined in this blog, a set of export promotion councils are supposed, and mandated under the Foreign Trade Policy, to capture firm level data for their sector. I am not sure how good is their data collection system but given that registration with one of the export promotion councils (we have dozens) is mandatory, they should be capturing that data on quarterly basis. One may explore the option of collecting data from them and compiling to get a picture.

    1. Thanks for pointing this new data source on exports. Yes, export promotion councils do have data on exports. But the disclosure by firms to these Councils is not regular, is not updated and in most cases not of high frequency. For example, the Plastic Export Promotion Council and The Cotton Textiles Export Promotion Council of India websites provide a exports number at annual frequency with latest year being 2015-16.

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  4. 1.RBI data is based on actual cash inflow and DGCI&S data are based on acrual system of accounting. So there would be difference in data to the extent of opening and closing unrealised payment of export.

    2. From DGFT productwise, port wise and firm wise data are available.

    3. After GST product wise firm wise data is available from GST returns.

  5. RBI's quarterly export data (based on BPM6) is NOT based on banking data alone. The banking data (called FETERS: Foreign Exchange Transactions Electronic Reporting System) is used along with DGCIS data to compile the entire BoP data based on IMF's 6th Balance of Payments manual (BPM6). By & large the export data is based entirely on DGCIS data. Only small adjustments are made to address exchange rate value issues (DGCIS uses older exchange rate than what IMF recommends) and coverage issues. Hence the two data are match (in fact more than they should).

    The question, however, is that whether it is right to use DGCIS data directly? IMF recommends reporting exports in FOB basis. Neither the Indian Customs Act's Section 14 nor the Determination of Custom Values Rules mandates that exports at customs should be recorded on FOB basis. If DGCIS is not doing this then using DGCIS data directly is a mistake.

    For imports IMF recommends CIF basis recording. This is also mandated by Determination of Custom Values Rules.

    FETERS data is primarily used to calculate leads and lags and address the coverage issues.


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