India's exports fall for 4th straight month, imports for 6th, in November

India’s exports declined for the fourth successive month in November and for the fifth time this fiscal year, amid continuing weak global demand and depressed global crude oil prices that impacted the processed petroleum products basket, shows government data.

Imports contracted for the sixth straight month, driven by petroleum, engineering and industrial items, an indicator of sustained demand slowdown in the economy. Besides, the lower valuation of crude oil imports helped narrow the trade deficit, compared to the year-ago period.

Exports fell 0.32 per cent in November, while imports declined by 12.71 per cent on a year-on-year basis, leaving a trade deficit of $12.12 billion against $16.61 billion last year, showed data released by the ministry of commerce and industry on Friday.

Key export sectors such as leather, gems and jewellery, ready-made garments, and petroleum posted negative growth, leading to lower domestic production.

Industrial production growth contracted for the third consecutive month in October, by 3.8 per cent, compared to a 4.3 per cent fall in September.

In FY19, exports hit a new high of $331 billion, registering growth of 9 per cent.

In October, the World Trade Organization revised its forecast for global trade growth this year to 1.2 per cent, from a forecast of 2.6 per cent in April.

Overall exports for November stood at $25.98 billion, much lower than the $26.38 billion in the previous month, with pharmaceuticals posting growth of 20 per cent, electronic goods 46 per cent, engineering goods 6.5 per cent, and petroleum products posting a decline of 13.12 per cent.

Aditi Nayar, principal economist at ICRA, said the substantial decline in import of transport equipment was a matter of concern, as was the decline in imports of various industrial inputs such as coal, iron and steel, non-ferrous metals, project goods, as well as organic and inorganic chemicals, although this partly reflects a YoY decline in commodity prices.

“With the sharp fall in merchandise trade deficit to $23 billion in October-November 2019, from $36 billion in October-November 2018, we expect the current account deficit at sub-1 per cent of the GDP in Q3FY20,” added Nayar.

Oil imports fell sharply to $11 billion in November 2019 from $13.5 billion in November 2018, accounting for around 46 per cent of the YoY compression in merchandise trade deficit.

“Prolonging trade tensions and protectionism, along with sluggishness in economies across the globe, has further dented the Indian export sector. The slowdown projected across economies in the short and medium term make a return to normal trade relations between countries look like a mere probability,” said Sharad Kumar Saraf, president, Federation of Indian Exports.