Trade deficit narrows to $9.59 billion in Feb, exports grow by 2.4%

Exports took a beating for the fourth consecutive month, as growth in February fell to 2.44 per cent, with major foreign exchange earners such as gems and jewellery, engineering goods, and petrochemicals seeing sluggish growth.
Imports also contracted for the second time in the past three months. As a result, the trade deficit figures fell to their lowest level in the current financial year (2018-19 or FY19). The effective trade deficit fell to $9.59 billion in February from $14.73 billion in January.

Outbound trade had risen by 3.74 per cent in January, as exports from the same sectors had taken a beating. In February, exports stood at $26.67 billion.
India's performance in the external sector had crashed since November, when growth had reached 0.8 per cent.
Despite contracting only once in FY19, the low growth rates have decimated the government's hope of reaching the $350-billion trade target. Cumulative exports in the first 11 months of the current financial year stand at $ 298.5 billion.
Major exports sputter
In February, 12 of the 30 major product groups were in negative territory. Prime among them was engineering goods. Despite earning one-fourth of foreign exchange through exports, the sector grew at a marginal rate of 1.7 per cent, up from 1 per cent in the previous year.
Another major export earning sector — gems and jewellery — continued to contract. Periodically falling into the negative zone in November, the $3.72 billion worth of exports in the sector contracted by 2 per cent in February, after a growth of 6.67 per cent in January.
Chart A spin-off effect due to a global trade war between the US and China had also affected India’s trade, affecting both imports and exports, Ganesh Kumar Gupta, president, Federation of Indian Export Organisations (FIEO) said. Exporters have reiterated his demand for urgent support, including augmenting the flow of credit and better fiscal support.
However, drugs and pharmaceuticals exports remained steady at 16.11 per cent growth, up from the 15.2 per cent in January.
Receipts from processed petroleum exports also remained muted, declining by 7.7 per cent after a 19 per cent fall in January.
While declining oil prices marred the chances of earning the same dollars through exports, it helped India save foreign exchange through a slowdown in imports.
Imports dive deep
However, the largest component of the import bill, crude oil, saw inbound shipments declined by 8 per cent, up from the 3.59 per cent fall in the previous month. Global crude prices started reducing from early November and a supply glut is expected to stay as sanctions continue to pump out oil, while the US adds fracking capacity.
Gold, the second-largest component of the import bill, also saw a sharp drop in inbound shipments. Imports of the metal fell by 10.81 per cent in the latest month to $2.58 billion. The rate of fall has surprised industry watchers as January had seen a 38 per cent jump in inbound shipments. The industry continues to see volatility as imports had risen in July after remaining in negative territory for six months.
Imports of the metal had remained low since the Rs 143-billion Nirav Modi scam earlier this year.
Non-oil, non-gold merchandise imports, showcasing industrial demand saw contraction sharpen in February. It contracted by 3.72 per cent to $ 24.30 billion, as compared to a fall of 0.8 per cent in January.

March exports decline 0.66% to $29.11 bn; trade deficit widens to $13.69 bn

Exports fell in March due to a contraction in refinery products, gems and jewellery and textiles, but managed to cross the $300-billion target for the first time in two years in 2017-18. A decline in the growth rate for three straight months till February led to a 0.66 per cent fall in exports in March. The growth rate had slipped to 4.48 per cent in February, down from 30.5 per cent in November.
According to data released by the commerce and industry ministry on Friday, exports stood at $29.11 billion in March, taking the total tally in 2017-18 to $302.84 billion, marginally above the government’s target of $300 billion. In 2016-17, exports stood at $275.85 billion. India’s annual exports remained above the $300-billion mark till 2014-15, but declined to $262.29 billion in 2015-16 due to a global slowdown.

Imports grew 7.15 per cent in March to $42.80 billion, against 10.4 per cent growth in February. During 2017-18, imports increased 19.59 per cent to $459.67 billion.
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The trade deficit came in at $13.69 billion in March, higher than $11.98 billion in February. For the full financial year, the deficit stood at $156.83 billion, up from $108.50 billion in 2016-17, mainly due to a rise in oil import bill.
FY18 exports Source: Ministry of Commerce & Industry Of the 30 major product groups, 18 recorded growth in March, the same number as in February. However, a sizeable chunk of major export segments continued to see a contraction in March. These include the volatile refinery products segment, which contracted 13.22 per cent after a 27.44 per cent rise in February.
Readymade garments, the sector in which India's export competitiveness has steadily fallen over the past financial year, also continued its downward slide. In March, the sector exported $1.49 billion worth of merchandise, a 17.78 per cent fall from a year ago.
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The gems and jewellery sector also witnessed a 16.57 per cent decline in shipments in March, up from the 5.14 per cent contraction seen in February. “The pace of exports of gems and jewellery would take a cue from demand as well as the availability of funding for this sector in the aftermath of the fraud reported by Punjab national Bank (PNB). Lower exports would dampen imports of gold and pearls, precious, and semi-precious stones,” said Aditi Nayar, principal economist at Icra.
Engineering goods exports, on the other hand, rose 2.62 per cent to $8.11 billion after a 1.88 per cent fall in February. Other segments that posted growth include pharmaceuticals (up 8.40 per cent) and organic and inorganic chemicals (up 31.75 per cent).
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“A dip in the volume of gold imports in March more than offset the price rise in the interim period, contributing to the 40 per cent year-on-year contraction in the value of gold imports. However, the decline was largely offset by the pick-up in crude oil imports during the month,” Nayar said.
In March, the country imported $11.10 billion worth of crude oil, a 13.92 per cent rise, compared to 32.05 per cent in the previous month. This took the cumulative import bill for 2017-18 to over $459 billion, from $384 billion in 2016-17.
Non-oil, non-gold imports, a sign of domestic industrial demand, rose 12.2 per cent in March, after a 7.28 per cent decline in February.

Jan export growth rate dips to 9.07%; trade deficit widens to 56-month high

Growth in exports reduced in January to 9.07 per cent, from 12.03 per cent in December.
With exports of $24.38 billion, the growth rate in January dipped to a single digit for the first time in three months. The rate in December more than halved to 12.4 per cent, from November’s 30.5 per cent.
“More than 6 per cent of the growth has been contributed by petroleum products. More importantly, labour-intensive sectors like garments, carpets, handicrafts, and man-made textiles are exhibiting negative growth, primarily due to liquidity crunch because of funds getting blocked under the goods and services tax regime,” Ganesh Kumar Gupta, president of the Federation of Indian Exports Organisations, said.
Of the 30 major product groups, 20 were in positive territory in January, against 21 in December.
On the other hand, the figures made clear that India is set to overshoot in 2017-18 the $380.36 billion import bill of the previous financial year.
The pace of imports continued to quicken for the third straight month, leading to inbound shipments in January rising by 26.10 per cent, higher than the 21.1 per cent rise in the previous month.
This makes the cumulative import bill for the first 10 months of the current financial year $379 billion.
The trade deficit widened to a 56-month high of $16.3 billion in January, against the $14.9 billion deficit in December and $9.91 billion registered a year ago in January 2017.
In this financial year, the deficit increased to $131.14 billion till January, against the $114.9 billion in the corresponding period in the previous year.
The deficit was fed by a huge rise in oil imports, which shot up by more than 42 per cent in January to $11.65 billion after the 34.9 per cent rise in the previous month.
However, gold imports slipped by 22.07 per cent to $1.59 billion after the 71.5 per cent jump in the previous month.
The dip in gold imports was more than offset by higher imports of silver, pearls, and precious and semi-precious stones, said Aditi Nayar, principal economist, Icra.
Non-oil and non-gold imports, taken as a sign of industrial demand, rose 24.43 per cent in January, after rising 12.9 per cent in December. This implies that the recent, strong pickup in industrial production may continue over the coming months.
Index of industrial production growth in December stood at 7.1 per cent.
A sizeable chunk of India’s major export segments, including refinery products, saw a faster growth rate of 39.5 per cent in January, against the 25.15 per cent rise in December.
Pharmaceuticals rose 8.6 per cent from 6.95 per cent in December and organic and inorganic chemicals by 33.6 per cent from 31.36 per cent in the previous month.
However, major segments saw a reduction in growth rates. They are engineering goods, which grew 15.77 per cent in January, compared to 25.32 per cent in December, as well as gems and jewellery, which rose 0.89 per cent from 2.38 per cent in December.
Earlier this month, Finance Minister Arun Jaitley had announced in the Budget the government hoped exports would grow 15 per cent in the current financial year. Till January, India’s cumulative merchandise shipments in 2017-18 reached more than $246 billion.
“With the merchandise trade deficit in January being sharply higher than expected, we have revised our forecast for the 2017-18 current account deficit to $47-50 billion, or nearly 2 per cent of gross domestic product (GDP), from the earlier expectation of $42-44 billion,” Nayar said.
This is the last crucial data before the GDP numbers for the third quarter of 2017-18 and the second Advance Estimates for the current financial year are released at the end of February.

Exports jump 12.3% to $27 bn in December; imports rise 21.1% to $41.9 bn

Exports rose 12.36% in December to $27.03 billion year-on-year on account of strong performance by sectors like engineering goods and petroleum products.Exports rose 12.36% in December to $27.03 billion year-on-year on account of strong performance by sectors like engineering goods and petroleum products.Imports surged significantly to $41.91 billion, up 21.12%, on increased inbound shipments of crude oil and gold.As per the data released by the commerce ministry, the trade deficit or difference between imports and exports was $14.88 billion, up about 41% year-on-year."Exports have been on a positive trajectory since August 2016 to December 2017 with a dip of 1.1% in the month of October 2017," the ministry said in a statement.Exports of engineering goods as well as petroleum products showed an increase of over 25% in December.However, shipments of ready-made garments declined by 8% to $1.33 billion last month.Gold imports surged by 71.5% to $3.39 billion last month as against $1.97 billion in December 2016.The imports of petroleum products and crude oil increased by a significant 35% to $10.34 billion in December, from $7.66 billion a year ago.The ministry said the global Brent prices increased by 18.75% last month, compared to December 2016 as per World Bank commodity price data.Cumulative value of exports for the period April- December, 2017-18, was $223.512 billion as against $199.467 billion in the year-ago period, registering a growth of 12.05%.The imports during first nine months of the current fiscal amounted to $338.369 billion as against $277.89 billion, a growth of of 21.76%.The trade deficit during the period widened to $114.85 billion.Meanwhile, the Reserve Bank data showed that the exports in services in November 2017 were valued at $15.392 billion.
The imports were valued at $9.64 billion.It said in a press release that the trade balance in services (net export of services) for the month was estimated at $5.74 billion.