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Merchandise exports in August brought needed cheer to a gloomy economic environment, growing 13 per cent to $26.1 billion compared with $23.1 billion in the same month last year.
Month-on-month, this is a second straight month that exports saw double-digit growth, due to improved demand in the US, Europe, Africa and the Asia-Pacific.
Imports in August contracted 0.7 per cent to $37.1 billion from $37.3 billion in August 2012. Trade deficit, which is part of the wider current account deficit (CAD), declined almost 23 per cent at $10.91 billion in August against $14.17 billion in the corresponding year-ago month.
Commerce and industry minister Anand Sharma said the import contraction was due to a number of steps taken to curb gold import. The government had, among other things, raised the tariff on gold to 10 per cent in August from the earlier eight per cent. Gold import in August came down to $0.65 billion compared to $2.2 billion in July this year, said the director general of foreign trade, Anup K Pujari.
However, the country’s import bill remained under pressure on account of a rise in crude oil by 17.9 per cent to $15.1 billion in August against $12.8 billion in the same month in FY13. Total oil import during April-August rose to $69.7 billion, up 5.6 per cent from $66 billion in the corresponding period of 2012-13.
“Oil imports continued to put pressure due to a rise in prices of Brent crude, which was $112-119 a barrel last month,” said Sharma.
Total export during April-August was $124.4 billion against $119.8 billion earlier, up 3.9 per cent. Total import rose 1.7 per cent to $197.8 billion over the $194.4 billion during the corresponding period of FY13, according to the data released here on Tuesday.
“We have taken a number of steps to reverse the trend in exports, in negative territory for some time due to contraction of demand and other global factors. We are firmly in positive territory now and we are gradually closing the big gap by bringing imports down,” said Sharma.
The government is expecting import containment to continue, with a gradual decline in coal import, Sharma said, as a result of which the trade deficit is expected to contract further.
Non-oil import was down 10.4 per cent in August, reaching $21.95 billion from the earlier $24.5 billion. In April-August, total non-oil import fell 0.3 per cent to $128.1 billion from $128.5 billion in the same period last financial year. Depending on whether imports other than non-essential commodities are declining or not, the figures will have repercussions on economic activity.
Issuing the data on Tuesday, Sharma also said he was expecting agricultural exports to do significantly well this year, due to a robust monsoon and bumper harvest.
Export of rice is expected to fetch a good price this year, with Russia lifting a ban on import of non-basmati rice from India, said commerce secretary S R Rao.
The minister denied an export rise due to the rupee’s fall. He said 45 per cent of the country’s exports had high import content. Exports were rising due to a rise in demand in the traditional markets of the US and Europe, he said, and also due to diversification strategy by exporters to enter markets in Africa, Asia and Latin America.
According to Rao, exports from all sectors did well in August, barring gold jewellery. He also expressed concern over a fall in export of engineering goods, which he said showed some sign of improvement in August.
Rise in exports, coupled with import containment, is expected to improve the current account deficit situation this financial year, said Manishi Raychaudhuri, Asia-Pacific strategist at BNP Paribas. The trade deficit is one part of the CAD, the others being services trade, remittances and net investment income.
On resuming iron ore export, Sharma said the government was clear that it wanted to export iron ore fines not used by the domestic steel industry.
The Federation of Indian Export Organisations has suggested a two-pronged strategy. It has urged support to some sectors still in the red, such as engineering, electronics and gems & jewellery, with more help to sectors such as textiles, pharmaceuticals, chemicals, plastics, leather, cereals and value-added agricultural products.
All of these can easily add a few billion dollars more, to help us cross the export target fixed for this year, said its president, Rafeeque Ahmed. The government has set a target of exports rising to $325 bn in the current financial year against $300 bn in 2012-13.
The World Trade Organization recently cut its forecast for global trade growth to 2.5 per cent for this year from 3.3 per cent earlier and revised the projection down to 4.5 per cent for 2014 from five per cent previously.
