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A sharp fall in petroleum and other commodity prices led to a 14 per cent annual fall in India's merchandise exports in April at $22.05 billion, compared with $25.63 billion in the corresponding month last year, showed data released by the commerce & industry ministry on Friday. The fall in April is the fifth consecutive monthly contraction in exports.
India wasn't the only one to take a hit on this front. While Chinese exports declined 6.2 per cent in April, Korea's fell 8.1 per cent and Taiwan 11.7 per cent, said YES Bank chief economist Shubhada Rao.
Imports for the month stood at $33.04 billion, 7.5 per cent lower than $35.7 billion in April 2014. This segment also saw contraction for the fifth consecutive month. For April, the trade deficit was $11 billion, nine per cent higher compared to $10.1 billion in the corresponding month last year. Compared to March this year ($11.79 billion), however, the deficit was lower.
In April, oil imports fell a steep 42.65 per cent to $7.4 billion, owing to lower commodity prices. In April last year, these imports stood at about $13 billion.
Non-oil imports stood at $25.60 billion, 12.58 per cent higher than $22.74 billion a year ago. Much of this was accounted for by gold imports, which rose a whopping 78 per cent to $3.1 billion.
Gems & jewellery export declined 10 per cent to $2.94 billion. Non-oil, non-gold imports rose seven per cent to $22.47 billion in April, showing an industrial recovery would be gradual.
Petroleum exports fell 46.5 per cent to $2.75 billion.
S C Ralhan, president of the Federation of Indian Export Organisations, said, "Negative growth in exports is continuing since December 2014, though the decline has come down from 21 per cent in March to 14 per cent in April. The prime reason continues to be softening of crude, metal and commodity prices."
Engineering goods, the biggest contributor to exports, rose only 2.7 per cent year-on-year to $5.6 billion. Exports from the electronic goods segment declined 12.29 per cent to $4.73 billion, while plastics and linoleum product export fell 19.30 per cent to $0.39 billion.
"The negative growth in gems & jewellery, electronics and plastic goods segments is worrying, as domestic capabilities are being augmented in these sectors," Ralhan said.
Export of food items such as meat, dairy & poultry products were down 24 per cent, marine products 15.72 per cent and rice 6.8 per cent. Labour-intensive leather and leather exports fell 7.4 per cent.
"The decline in export of rice, marine products, meat, dairy and poultry products, and leather and leather products are of equal consequence, as these sectors have shown great promise in the past," Ralhan said.
In 2014-15, merchandise exports had declined to $310.53 billion from $314.41 billion in 2013-14. The government had set a target of $340 billion for 2014-15, 8.7 per cent higher than the actual figure.
Rao said she expected export growth to accelerate to four per cent this financial year, with structural support from the new foreign trade policy and an upturn in manufacturing and investment activity, supported by an easing interest rate cycle.
Among import categories, the fertiliser segment saw a 71 per cent jump at $0.68 billion, owing to stocking of inbound shipments before the kharif season starts in July.
Import of items used in industrial activity, such as machine tools, declined 27 per cent, pearls, precious & semi-precious stones 22.33 per cent and project goods a meagre 0.04 per cent. However, transport equipment import rose about 70 per cent.
