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    Exports contract by 11.19% to $23.88 billion in January

    Synopsis

    Imports declined by 11.4 per cent during the month, the sharpest since May this year, while the trade gap dropped to an 11-month low of $8.3 billion.

    ET Bureau
    NEW DELHI: India’s exports fell 11.2 per cent in January, the most in two and half years, but the slump in global crude oil helped lower the country’s import bill and narrow the trade deficit.

    The monthly contraction in exports was the third this fiscal, led by low valuation of petroleum products and dismal performance of the gems and jewelley and pharma sectors, data released by ministry of commerce and industry on Friday showed. Exports stood at $23.884 billion in January compared with $26.891 billion a year ago.

    The worsening economic situation in EU and Japan weakened demand substantially.

    Image article boday


    Imports declined by 11.4 per cent during the month, the sharpest since May this year, while the trade gap dropped to an 11-month low of $8.3 billion. Non-oil, non-gold imports were up 3.4 per cent, but the pace slowed substantially — it had grown 12.5 per cent in December suggesting a deceleration in domestic economic activity.

    “Amidst the encouraging decline in the merchandise trade deficit in January 2015, the contraction in nonoil merchandise exports is a cause of concern with the outlook for global demand remaining gloomy,” said Aditi Nayar, senior economist, ICRA. Exports touched $265 billion in the first 10 months of the fiscal and will need to grow at an average 14 per cent in the next two months to meet the target of $340 billion for the fiscal.

    Gold imports, though up slightly from December, remained at a comfortable level of $1.5 billion. Yellow metal imports have eased substantially after the government scrapped a rule last year that mandated traders export one-fifth of the gold consignment imported into the country.

    In November, gold imports posted a 570 per cent growth on an annual basis. "A rise in gold and non-oil, non-gold imports and unfavourable performance of merchandise exports are expected to offset the robust rise in the services trade surplus, causing the current account deficit to print at a six-quarter high $11.5-12.5 billion in Q3FY15", Nayar added.

    India’s current account deficit had widened to a five-quarter high of 2.1 per cent of GDP in the second quarter. The department of commerce has also made a pitch to the finance ministry to reduce the customs duty on gold from 10 per cent, which has led to high smuggling and also dampened exports.

     


    Gems and jewellery exports contracted by 3.73 per cent in January to $3 billion.

    Commerce secretary Rajeev Kher had said in an event earlier this week that it was important to clear large projects to improve exports performance as demand from China and the EU declines.

    The slump in global oil prices led to a 37.46 per cent contraction in India’s biggest import item, but it also pulled down petroleum exports, which fell 48.69 per cent in the month.

    Global crude oil price, after touching a low of $45 per barrel last month, rose to over $60 per barrel on Friday.

    Engineering goods and readymade garments segments put up a decent show with a growth of 9 per cent and 9.2 per cent, respectively.

    Rafeeque Ahmed, president, FIEO, said, "Indian exports are hovering around $300 billion from the last four years starting from 2011-12. This suggests that far radical changes are required both in the Union Budget and the foreign trade policy to support the export sector, failing which decline will be difficult to arrest in view of emerging global scenario." The government is expected to announce a five-year foreign trade policy in the next fiscal that will not only focus on enhancing exports but also look to boost domestic manufacturing. Services showed a trade surplus of $7.6 billion in January versus $6.3 billion last month.


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    ( Originally published on Feb 13, 2015 )
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