India’s tottering exports slipped into negative territory in October, falling 5.04 per cent annually to $26.09 billion. The decline — the first in six months — is largely due to a fall in shipments of petroleum products, electronics, engineering items, gems & jewellery, and iron ore.
A 280 per cent surge in gold imports to $4.1 billion during the month pushed total imports up 3.16 per cent to $39.45 billion. This widened the trade deficit to $13.3 billion from $10.59 billion in October 2013, but the gap was lower than September’s $14.24 billion deficit.
Sectors that were expected to drive a turnaround in exports either saw a fall or posted miniscule growth, noted exporters’ body FIEO.
“This is an alarming situation which needs to be addressed quickly,” said FIEO President Rafeeque Ahmed.
Plea for interest subvention Exporters want the Government to re-introduce interest subvention on exports, which lapsed in April, as the cost of credit has risen by 3 per cent. The extension was expected to be announced in the Foreign Trade Policy, but there is no clarity on when the policy will be announced.
Exports of engineering goods, one of India’s top export items, declined 9.18 per cent to $5.2 billion in October, while electronic product shipments fell 30.36 per cent to $495 million as the European market remained shaky.
Petroleum product exports declined 0.16 per cent to $5.62 billion, largely due to falling global prices.
“Export growth in the remainder of 2014-15 is likely to be muted given the sluggish growth in key export markets such as Europe and Japan as well as the lower prices of commodity-intensive exports,” said Aditi Nayar, Senior Economist, ICRA Ltd.
Oil impact Imports were weighed down this October by a sharp 19.2 per cent reduction in oil imports to $12.36 billion. Non-oil imports, on the other hand, were at $27.08 billion, which was 18.9 per cent higher than last October.
To keep the trade deficit in control, the Government is in talks with the RBI on curbing gold imports once again.
Import of project and capital goods, which indicates higher economic activity, however, stayed muted or declined in October.
Total exports in the April-October 2014 period, at $189.79 billion, were 4.72 per cent higher than in the corresponding period of the previous fiscal year. The cumulative value of imports for the April-October period was $273.55 billion, 1.86 per cent higher than imports in the same period last year.
The trade deficit during this period was at $83.75 billion, lower than the deficit of $87.31 billion in April-October 2013.