Exports jump 28% in March; trade deficit swells to 4-month high of $10.4 bn

However, at $274 bn, exports fail to exceed $300 bn in FY17 for second year in a row

Merchandise exports grew 27.6 per cent in March, the final month of the 2016-17 financial year, the steepest rate in a little over five years. 

However, this failed to help outbound shipment cross $300 billion in FY17, for a second straight year. Exports were $305 billion in 2011-12 and remained a little over $300 billion in the next three years. These, however, declined to $269 billion in 2015-16.

The official data issued on Thursday showed an export rise for a seventh straight month in March to $29.2 billion, against $22.9 billion in the same month a year before, as petroleum and engineering exports rebounded. For 2016-17, exports were $274.6 billion, a 4.7 per cent rise over  the $262.3 billion the previous year. 

Imports also rose substantially in March, by 45.2 per cent to $39.7 billion from $27.3 billion in the same month of 2016.  A spike in gold and crude oil imports pushed the bill. Imports touched $380.4 billion in FY17.

Consequently, the trade deficit for March stood at a four-month high of $10.4 billion. When compared year-on-year, it was more than double of $4.4 billion in March, 2016. However, the trade deficit for the entire year fell 11 per cent to $105.8 billion, from $118.7 billion the previous year. 

The World Trade Organization expects global trade growth of 2.4 per cent in 2017, less than expected earlier but higher than the tepid 1.3 per cent rise in 2016. It has further pegged global merchandise trade to grow by 2.1 to four per cent in 2018.

Ganesh K Gupta, president of the Federation of Indian Export Organisations, said: “The global scenario, reflecting a downward forecast, by the WTO for 2017 does not reflect a positive picture.”  

The lack of robustness in manufacturing can be gauged from another data item from the Reserve Bank, on services trade.

There was a surplus here but it declined in the first 11 months of FY17 over the same period a year before. The services trade surplus was $59.3 billion in April-February 2016-17, against  $64.4 billion a year before. 

“Based on the wider than expected merchandise trade deficit in March, the current account deficit is likely to print at $16.5-17.5 billion in FY17,” said Aditi Nayar, principal economist at rating agency ICRA.

Major exchange earners also saw significant growth in March. Export of engineering goods saw the highest rise, up 47 per cent, similar to February. This led to $7.8 bn of sectoral export in March as compared to $5.3 billion a year before.

“Sustainability of the 47 per cent spike in export of engineering goods remains unclear, to the extent that it has been driven by higher metal prices,”  said Nayar.

Earnings from petroleum export rose a massive 69 per cent to $3.7 billion, up from the 27 per cent rise in February. Readymade garment export rose by 20.3 per cent to $1.8 billion. Import of crude oil and like petro products rose 102 per cent in March, adding $9.7 billion to the bill.