India's trade deficit widened the maximum in October in 17 years to $19.6 billion, as exports in the month fell to a 12-month low of $19.9 billion.
Exports in October grew just 10.8 per cent year-on-year (the slowest pace in the last two years) to $19.9 billion, according to the data released by the Commerce Ministry on Thursday.
Export growth was 82 per cent in July, then fell to 44.25 per cent in August and further down to 36.36 per cent in September. The export slowdown is mainly due to a demand contraction in traditional markets such as Europe and the US.
Imports in October soared 21.7 per cent to reach a three-month high of $39.5 billion. The faster import growth was mainly on account of higher prices of crude oil and vegetable oil and an increase in coal imports.
Exports during April-October 2011 surged 46 per cent to $179.8 billion, while imports during the period rose 31 per cent to $273.5 billion. This led to a trade deficit of $93.7 billion. Official sources had said last month that if the trade deficit widens to $155 billion for this fiscal, the current account deficit may cross 3 per cent of the GDP.
Oil imports during October were $10.07 billion, an increase of 20.73 per cent. Oil imports during April-October 2011 were $81.9 billion, registering a 40.82 per cent growth. Non-oil imports, including capital goods, during October were $29.43 billion, up 22.07 per cent from the previous year. Non-oil imports during April-October grew by 27.15 per cent to $191.54 billion.
Mr Ramu Deora, President, Federation of Indian Export Organisations, said the crisis in the euro zone will spread in the next couple of months making exports more difficult in the coming months. Mr Deora said rupee depreciation might have helped few segment of exporters to fetch better margins but not have helped in lifting the export volumes.
The weak rupee is hurting the manufacturing sector with increase in prices of inputs and hike in freight cost, he said and asked the RBI to intervene to arrest the high volatility in rupee. He also said exports may touch $280 billion during this fiscal.